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Sometime in 1972, a de facto separation between the spouses occurred due to irreconcilable differences, with wife leaving the conjugal home. She left for the US and became a US citizen. She filed for dissolution of marrige while in the US but held it in abeyance as she wanted to obtain property settlements with husband in the Phil. A letter-agreement was entered into with her mother-in-law, which obligated thelatter solidarily with the husband to deliver certain real properties in the Phils. And abroad as well as to pay the sum of 100k and $35k on the same day, and to give monthly support payable in 6 mos. In advance every year for the care of Susana de Leon. The mother-in-law made cash payments to the wife in the said amounts. Meanwhile, the spouses filed before the CFI of Rizal to dissolve the CPG and an order similar to the agreement was rendered by the court. When Sylvia sought for the execution of the order, as she was also seeking payment of support for 4,500.00php monthly. The mother-in-law then filed to intervene in the case as the owner of the properties subject to the order of the court, and questioned the validity of the agreement, which had for its purpose the termination of the marital relationship of the spouses (Intimidation asserted by the MIL: bring to court alleging adultery or concubinage on the part of the husband to scandalize the family.) The lower court ordered the wife to return the amounts paid and reiterating the order of the court for the dissolution of the CPG. An appeal was filed by the wife in the CA, who affirmed the decision of the lower court. Instant appeal filed. W/N the letter-agreement was valid? No. The SC agrees with respondent court in declaring the agreement to be void applied Art. 121 of the civil code w/c provides that contracts for personal separation between husband and wife, as well as every extra-judicial agreement, during marriage, for the dissolution of the CPG or ACP between spouses. However, the argument of the MIL, that intimidation may vitiate consent and render the contract invalid, the ff. requisites must concur: 1) the intimidation must be the determining cause of the contract, or must have caused the consent to be given; 2) the threatened act must be unjust or unlawful; 3) the threat must be real and serious, there being an evident disproportion between the evil and the resistance which all men can offer, leading to the choice of the contract as the lesser evil; 4) that it produces a reasonable and well-grounded fear from the fact that the person from whom it comes has the necessary means or ability to inflict the threatened injury. Applying the foregoing, the intimidation applied by the wife is obviously not the intimidation referred to by law. It is not the principal cause that moved her to enter into the agreement. Abando v. Lozada The spouses Abando were owners of three parcels of land in Mandaluyong, which Pucan and Cuevas tried to acquire from the spouses through purchase. The spouses did not accede to this, thus a verbal agreement was had for which Cuevas and Pucan represented that the land is to be leased by Prime Investments, and upon which a 5 storey-building was to be constructed and this was to be administered by the spouses and their son was to be given a job in the said place. They would also not be asked to vacate the premises. With this, the spouses agreed. Several documents were signed by the spouses executed by Pucan, which later turned out to be a Joint Venture Agreement and the second, turned out to be a Deed of Assignment over the said property in consderation of the amount of 144,000.00php. sensing that they had been duped, as no building was yet constructed, they inquired with the Registry of Deeds, and found that the properties had been transferred to the name of Prime Exchange, which were later on found to have been sold to Pucan. Thereafter, Pucan mortgaged the said property to the Lozadas for the amount of 60,000.00php. Pucan was unable to pay the installments and thus the property was foreclosed and bought by the Lozadas at a public bidding. The Abando spouses brought suit to annul the sale. The lower court granted such, but CA modified stating that 2 parcels of land were owned by the Lozadas lawfully. W/N the Lozadas are the rightful and legal owners of the property and w/n the sale was valid.
As correctly pointed out by the appellate court, 4 the strategem, the deceit, the misrepresentations employed by Cuevas and Pucan are facts constitutive of fraud which is defined in Article 1338 of the Civil Code as that insiduous words or machinations of one of the contracting parties, by which the other is induced to enter into a contract which, without them, he would not have agreed to. When fraud is employed to obtain the consent of the other party to enter into a contract, the resulting contract is merely a voidable contract, that is, a valid and subsisting contract until annulled or set aside by a competent court. But despite this, the Lozadas are still rightful owners of the place absent any clear and convincing proof of bad faith on their part. Good faith refers to a state of the mind which is manifested by the acts of the individual concerned. It consists of the honest intention to abstain from taking an unconscionable and unscrupulous advantage of another. It is the opposite of fraud, and its absence should be established by convincing evidence. On the other hand, bad faith does not simply connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and conscious doing of wrong. It partakes of the nature of fraud. Standing alone, the fact that the private respondents did not investigate the title to the properties offered as collaterals does not constitute convincing evidence to rebut the presumption that they are in good faith. Under the rules on evidence, a presumption exists that private transactions have been fair and regular. Prior to the foreclosure proceeding, Francisco Lozada not only relied on the two certificates of title that were exhibited to him, he even went out of his way and verified from the records of the Register of Deeds if the properties were really in the name of Pucan. Alcasid v CA Petitioner, assisted by her husband, is the owner of a share in a parcel of land in Calamba, Laguna. Respondent Rufina Lim offered to buy the said property, to which the petitioner agreed to, upon payment of the price of 4.5m php for her share, and that the other co-owners of the property should also sell their shares in the property. Atty. Fernandez’ services were engaged and therafter, petitioner was informed that the other c-owners agreed to sell their shares for 1.5m php. Thus, a deed of sale was executed. Petitioner found out that the other co-owners did not accede to the sale. This prompted her to file with RTC of Calamba a petition to annul the sale, which denied the motion to dismiss and declared respondent in default, which, upon appeal to CA, was reversed. W/N the contract is based on fraud, undue influence and mistake which vitiated her consent, when Atty. Fernandez said that the co-owners agreed to sell their shares, amounting to a misrepresentation. No. Petitioner asserts that she did not know that Atty. Fernandez was also the counsel of respondent but this was made apparent to her in a letter sent to her which deals with the assumption of respondent of the payment of the BIR tax. In order that fraud may vitiate consent and be a cause for annulment of contract, the following must concur: 1.) It must have been employed by one contracting party upon the other (Art. 1342 and 1344); 2.) It must have induced the other party to enter into the contract (Art. 1338); 3.) It must have been serious (Art. 1344); 4.) It must have resulted in damage and injury to the party seeking annulment. To invalidate consent, the error must be real and not one that could have been avoided by the party alleging it. The error must arise from facts unknown to him. He cannot allege an error which refers to a fact known to him or which he should have known by ordinary diligent examination of the facts. An error so patent and obvious that nobody could have made it, or one which could have been avoided by ordinary prudence, cannot be invoked by the one who made it in order to annul his contract. Petitioner could have avoided the mistake had she taken extra care in ascertaining for herself if the other coowners had really consented to the sale. Undue influence, therefore, is any means employed upon a party which, under the circumstances, he could not well resist and which controlled his volition and induced him to give his consent to the contract, which otherwise he would not have entered into. It must in some measure destroy the free agency of a party and
interfere with the exercise of that independent discretion which is necessary for determining the advantages or disadvantages of a proposed contract. Petitioner entered into the contract of her own free will, as found by the CA. Private respondent did not commit any wrongful act or omission which violated the primary right of petitioner. Hence, petitioner did not have a cause of action. Samson v CA Private respondent Angel Santos was the owner of a haberdashery store Santos & Sons, located in premises leased in the Madrigal Building along Recto, owned by Susana Realty. The said store had been situated in the said place for almost 20 years. In 1983, the lease contract in force at the time was for one year. The next year, Susana Realty sent notice to Santos that the lease will not be renewed, but Santos stayed in the premises for an extended term. Samson thereafter offered to buy the store and his leasehold rights in the subject premises. By agreement of the parties, they agreed to a purchase price of 300k, 150k of which was paid upon execution of the agreement and the other 150k upon the renewal of the lease and thereupon the leasehold rights would be transferred to Samson. The initial 150k was agreed to by the parties to be payment for the improvements made by Santos on the premises. Samson had already taken over the store, when he received a letter from Susana Realty stating that the lease would no longer be renewed and that he is to vacate the premises. Thus, Samson filed with the lower court action for damages, alleging fraud and bad faith against Santos when he stated in his letter-proposal that the lease was impliedly renewed. Samson contends that this misrepresentation induced him to purchase the store. The lower court ordered Santos and Sons and Angel to pay Samson. This was reversed by the CA. W/N there was fraud and bad faith on the part of the respondent in stating that there was implied renewal of the lease, for which Samson based his consent and thus renders it vitiated. No. Bad faith is a state of mind affirmatively operating with furtive design or with some motive or ill-will. It is thus synonymous with fraud and involves a design to mislead or deceive another. In contracts, the kind of fraud that will vitiate consent is one where, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract, without which, he would not do so. This is known as dolo causante, which is basically a deception employed by one by one party prior to or simultaneous to the contract in order to secure the consent of the other. Based on the records of the case, Santos was not guilty of fraud or bad faith. The letter sent by the Real Estate Accountant of Susana Realty stated “pending renewal of your contract until the arrival of Ms. Madrigal”. Madrigal was the owner of the building. Clearly, this led Santos to believe and conclude that his lease contract was impliedly renewed and that formal renewal thereof would be made upon arrival of the said person. The pendency of the said renewal was also known to Samson, which he admitted upon cross-examination. The efficacy of the contract between the parties was made dependent upon the happening of this suspensive condition. It is actually Samson who is at fault, when he failed to exercise due diligence in verifying the status of the lease. For such failure, he takes all the risks and losses consequent to it. No effort was exerted by petitioner to confirm the status of the subject lease right. Under the facts proved, Santos cannot be held guilty of fraud or bad faith when he entered into the subject contract with petitioner. Causal fraud or bad faith on the part of one of the contracting parties which allegedly induced the other to enter into a contract must be proved by clear and convincing evidence, and this the petitioner failed to do. Umali v CA The Castillos were owners of a parcel of land in Lucena, which held a mortgage with DBP. Upon failure to pay the installments, the Castillos faced foreclosure, but upon making this known to Rivera, and he proposed to turn the adjacent 4 lots into a subdivision to raise the amount for payment. This was agreed to by the Castillos. A memorandum of Agreement was entered into by the Castillos and Slobec Realty (whose president was Rivera), for which the latter was to pay a downpayment of 70,000.00php and an additional 400,000.00php upon completion of the construction of the subdivision. Rivera contracted with Bormacheco for purchase of 2 tractors, for which a sales agreement was executed between the 2 for the delivery of one tractor, the total amount of which was 230,000.00php. 50,000.00php was paid as down payment, while 180,000.00php was to be paid installment, and to secure payment, a chattel mortgage was instituted on the said tractor. As further security, a surety bond was acquired in by Rivera and the Castillos in favor of Bormacheco. ICP guaranteed the obligation of Slobec with Bormacheco and required the Castillos to mortgage the property to them, which they agreed to. The aforesaid surety bond was in turn secured by an Agreement of Counter-Guaranty with Real Estate Mortgage. For violation of the terms of the counter-guaranty, the property was forclosed and sold to ICP as the highest bidder. Thereafter, ICP sold the land to PM Parts, and the latter sent a letter to the Castillos to vacate the property. An action to annul the sale to PM was instituted by the Castillos. The lower court declared the various agreements and contracts between the parties a snull and void, and declared that the sale was also void. The CA reversed.
W/N the foreclosure was valid and w/n the questioned documents are valid and binding upon the parties. No to both. Petitioners argue that the foreclosure proceedings should be declared null and void for two reasons, viz.: (1) no written notice was furnished by Bormaheco to ICP anent the failure of Slobec in paying its obligation with the former, plus the fact that no receipt was presented to show the amount allegedly paid by ICP to Bormaheco; and (b) at the time of the foreclosure of the mortgage, the liability of ICP under the surety bond had already expired. There is nothing in the records of the proceedings to show that ICP indemnified Bormaheco for the failure of the plaintiffs to pay their obligation. The failure, therefore, of Bormaheco to notify ICP in writing about Slobec's supposed default released ICP from liability under its surety bond. Consequently, ICP could not validly foreclose that real estate mortgage executed by petitioners in its favor since it never incurred any liability under the surety bond. No documentary evidence is presented to show that ICP had paid anything to Bormacheco, entitling the petitioners to pay them any amount, failure to do so would result in the foreclosure. The surety bond issued by ICP was to expire on January 22, 1972, twelve (1 2) months from its effectivity date, whereas Slobec's installment payment was to end on July 23, 1972. Therefore, while ICP guaranteed the payment by Slobec of the balance of P180,000.00, such guaranty was valid only for and within twelve (1 2) months from the date of effectivity of the surety bond, or until January 22, 1972. Thereafter, from January 23, 1972 up to July 23, 1972, the liability of Slobec became an unsecured obligation. The default of Slobec during this period cannot be a valid basis for the exercise of the right to foreclose by ICP since its surety contract had already been terminated. Besides, the liability of ICP was extinguished when Bormaheco failed to file a written claim against it within thirty (30) days from the expiration of the surety bond. Consequently, the foreclosure of the mortgage, after the expiration of the surety bond under which ICP as surety has not incurred any liability, should be declared null and void. The said Agreement of Counter-Guaranty is issued for the personal indemnity of ICP Considering that the fact of payment by ICP has never been established, it follows, pursuant to the doctrine above adverted to, that ICP cannot foreclose on the subject properties. It must be noted that Modesto N. Cervantes served as Vice-President of Bormaheco and, later, as President of PM Parts. On this fact alone, it cannot be said that PM Parts had no knowledge of the aforesaid several transactions executed between Bormaheco and petitioners. In addition, Atty. Martin de Guzman, who is the Executive Vice-President of Bormaheco, was also the legal counsel of ICP and PM Parts. These facts were admitted without qualification in the stipulation of facts submitted by the parties before the trial court. Hence, the defense of good faith may not be resorted to by private respondent PM Parts which is charged with knowledge of the true relations existing between Bormaheco, ICP and herein petitioners. Accordingly, the transfer certificates of title issued in its name, as well as the certificate of sale, must be declared null and void since they cannot be considered altogether free of the taint of bad faith. Carino v CA Encabo applied with the Bureau of Lands to purchase a parcel of land in the Tuason Estate, purchased by the government to be resold to bona fide tenants or occupants who are qualified to own public lands. Encabo, through Vicencio as agent, agreed with Quesada to transfer his rights to Quesada upon approval of the Land Tenure Administration. The said transfer was not put into writing, but it is alleged that the payment of the price of the rights was evidenced by receipts signed by Vicencio as witness. LTA, who was then unaware of the transfer, edjudicated the lot to Encabo, for which both signed an Agreement to Sell. Upon knowing of the transfer between Encabo and Quesada, the LTA disapproved the same as it said that the latter is not qualified for being an existing lot owner. Before the said disapproval, Quesada was allowed to take possession, who in turn allowed Vicencio to enter into possession and occupancy of the same lot. Thereafter, Encabo executed a Deed of Sale of House and Transfer of Rights to Carino and Vicencio, subject to approval of the LTA. Letter was sent to LTA for approval of the said transfer. Before approval could be made, Encabo executed a document with Quesada, which purportedly resold the property to Encabo the house and the rights over the lot. Carino then filed with the LTA a petition to approve the transfer. Both Carino and Encabo woth claim the right to purchase the said lot. The LTA ordered to maintain the status quo, but did not touch upon the validity of the documents, which it said was for the courts to decide. Appeal made to the Office of the President, which affirmed the same. W/N the Deed of Sale of House and Transfer of Rights on which petitioners based their application over the questioned lot, is simulated and, therefore, inexistent deed of sale. Yes. There is substantial and convincing evidence that it was a simulated deed of sale. The characteristic of simulation is the fact that the apparent contract is not really desired or intended to produce legal effects nor in any way alter the judicial situation of the parties. The parties knew that the document was at once fictitious and simulated where none of the parties intended to be bound thereby. There is no other document which evidences the payment of a sum of money by Carino to the Encabos for the said lot. Inconsistencies were found by the court in the testimonies of the Carinos, which are deemed badges of untruthfulness, showing no actual and real sale of the lot took place between the Encabos and Carinos. Also the Carinos could not produce the receipts allegedly issued for payments made. The Carinos said that they were not able to provide the receipts as they say these are with the Encabos, which strengthen the ownership and control over the property
by the Encabos. The names of the Carinos were never mentioned in the application with the LTA, which mean that this was mere speculation on the part of the Encabos if they should desire to sell the lot later on, and no inference can be made that they intended to transfer the lot specifically to the Encabos. Contracts of Sale are void and produce no effect whatsoever where the price, which appears therein as paid, has in fact never been paid by the vendee to the vendor. Art 1409 provides that contracts which are absolutely simulated or fictitious are inexistent and void ab initio, and can not be ratified and their illegality as a defense may not be waived. Also, since the LTA did not approve of the transfer, there is no legal transfer to speak of. The LTA did not approve of it, it merely ordered the maintenance of the status quo. Thus, the said document is not enforceable against the LTA. Petition denied for lack of merit. Javier v CA Tiro was a holder of an ordinary timber license over 2,535 hectares of land in Misamis Oriental, which he had assigned to the Javier spouses in a Deed of Assignment in consideration of a total amount of 120k, 20k of which was paid upon execution of the contract and 100k to be paid in installments of 10k per shipment of logs from the forest concession. Tiro had filed an application for another timber license to cover 2,000 hectares of the adjoining land. During the pendency of the application with the Bureau of Forestry, he executed another deed of assignment in favor of the spouses, payment would be of 30,000.00php, subject to the condition that the transfer shall be excuted upon approval of the application. Upon assumption of the timber license, the spouses were informed that the license was renewed, but would not be renewed again until they are able to create an organization with other adjoining timber license holders for a total of 20,000 hectares. Thus, along with de Lara, Oca and the Sanggaya Logging Comp. the spouses consolidated their licenses, which created a consolidation agreement approved by the BOF. The working unit was thereafter called the North Mindanao Timber Corporation. The spouses failed to pay the balance of the two assignment deeds, and thus, Tiro filed action in the lower court for the balances due. The lower court dismissed the complaint, and ordered Tiro to pay 33k to the spouses. The CA reversed and ordered the spouses to pay Tiro 79k as the remaining balance. W/N the deed of assignment dated February 15, 1966 and the agreement of February 28, 1966 are null and void, the former for total absence of consideration and the latter for non-fulfillment of the conditions stated therein. As found by the Court of Appeals, the true cause or consideration of said deed was the transfer of the forest concession of private respondent to petitioners for P120,000.00. The aforesaid contemporaneous and subsequent acts of petitioners and private respondent reveal that the cause stated in the questioned deed of assignment is false. It is settled that the previous and simultaneous and subsequent acts of the parties are properly cognizable indica of their true intention. The deed of assignment of February 15, 1966 is a relatively simulated contract which states a false cause or consideration, or one where the parties conceal their true agreement. A contract with a false consideration is not null and void per se. Under Article 1346 of the Civil Code, a relatively simulated contract, when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds the parties to their real agreement. As to the 2nd agreement or assignment, the spouses are not liable under such, as the suspensive condition, which is the approval of the additional license, did not take place. Thus, it did not give rise to any obligation. The said agreement is a bilateral contract which gave rise to reciprocal obligations, that is, the obligation of private respondent to transfer his rights in the forest concession over the additional area and, on the other hand, the obligation of petitioners to pay P30,000.00. The demandability of the obligation of one party depends upon the fulfillment of the obligation of the other. In this case, the failure of private respondent to comply with his obligation negates his right to demand performance from petitioners. Delivery and payment in a contract of sale, are so interrelated and intertwined with each other that without delivery of the goods there is no corresponding obligation to pay. The two complement each other. Moreover, under the second paragraph of Article 1461 of the Civil Code, the efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence. In this case, since private respondent never acquired any right over the additional area for failure to secure the approval of the Bureau of Forestry, the agreement executed therefore, which had for its object the transfer of said right to petitioners, never became effective or enforceable. Villamor v CA Macaria Reyes was the owner of a 600 sqm parcel of land in Caloocan, half of which was sold to the petitioners Villamors for the amount of 70.00php per sqm. In deed of option executed by the Reyeses, it was stated that the said price was used in consideration of the agreement between the parties that the other half portion of the land shall be subject to an option to buy by the Villamors if the need for the sale arises, and they also are given the option to sell if the need arises. When the husband Reyes retired, they made known to the Villamors their desire to repurchase the property, to which the Villamors answered by reminding them that they had the option to buy the remaining property. The Villamors also
countered that they had disclosed their desire to exercise the option several times to the Reyeses, but they were not entertained. Thus, the Villamors filed complaint in the lower court, which ordered the Reyeses to allow the petitioners to exercise their option. The CA reversed and dismissed the complaint. W/N the deed of option is void for lack of consideration. No. As expressed in Gonzales v. Trinidad, 67 Phil. 682, consideration is "the why of the contracts, the essential reason which moves the contracting parties to enter into the contract." The cause or the impelling reason on the part of private respondent executing the deed of option as appearing in the deed itself is the petitioner's having agreed to buy the 300 square meter portion of private respondents' land at P70.00 per square meter "which was greatly higher than the actual reasonable prevailing price." It appears that while the option to buy was granted to the Villamors, the Reyeses were likewise granted an option to sell. In other words, it was not only the Villamors who were granted an option to buy for which they paid a consideration. The Reyeses as well were granted an option to sell should the need for such sale on their part arise. In the instant case, the option offered by private respondents had been accepted by the petitioner, the promise, in the same document. The acceptance of an offer to sell for a price certain created a bilateral contract to sell and buy and upon acceptance, the offer, ipso facto assumes obligations of a vendee. Since there was, between the parties, a meeting of minds upon the object and the price, there was already a perfected contract of sale. What was, however, left to be done was for either party to demand from the other their respective undertakings under the contract. It may be demanded at any time either by the private respondents, who may compel the petitioners to pay for the property or the petitioners, who may compel the private respondents to deliver the property. Although the deed did not provide for a period within which to exercise the option, under the Code, for actions based on written contracts, the prescriptive period is for 10 years, from the execution of the same. The failure of either parties to demand performance of the obligation of the other for an unreasonable length of time renders the contract ineffective. The action was brought 17 years from the execution of the deed, and thus beyond the prescriptive period. Although there were allegations that the Villamors sought to have it enforced back in 1984, it was still beyond the prescriptive period. It is of judicial notice that the price of real estate in Metro Manila is continuously on the rise. To allow the petitioner to demand the delivery of the property subject of this case thirteen (13) years or seventeen (17) years after the execution of the deed at the price of only P70.00 per square meter is inequitous. For reasons also of equity and in consideration of the fact that the private respondents have no other decent place to live, this Court, in the exercise of its equity jurisdiction is not inclined to grant petitioners' prayer. Olegario v CA Marciliano Olegario and Arelia Olegario (spouses) are owners of a parcel of land in Caloocan. They were childless, but they reared and educated respondents Rivera, Olegario and Teves. Aurelia died first, and Marciliano, in order to prevent the payment of inheritance tax, they sold to the respondents the said property for the amount of 50,000.00php, and although a contract of sale was executed, this was not registered. Thereafter, Marciliano also died, and as he died intestate, extrajudicial settlement of the estate was instituted by the remaining heirs, bonifacio Olegario, bro of Marciliano, and Victorino, niece of Aurelia. They were awarded the property in question. They then sold the property for the amount of 200k to Adajon and Tejon for which a TCT was issued in their names. 3 years after being sold the property, the respondents sought to register the contract, but was surprised that the title was already in other people’s names. Thus, action for annulment of the settlement of the estate and damages were filed by the respondents with the lower court. The trial court ruled in their favor, with the CA modifying the order. W/N the sale to respondents was a valid contract of sale. No. There is no question that petitioners are the lawful heirs of spouses Olegario. Under Article 160 of the New Civil Code, the subject lot is presumed to be conjugal property. The death of Aurelia Rivera-Olegario on March 19, 1986 dissolved the conjugal partnership. By virtue of such dissolution, 1/2 of the property should appertain to Marciliano as his share from the conjugal estate plus another 1/4 representing his share as surviving spouse of Aurelia. 9 Petitioner Adelaida Victorino, as the sole surviving niece of Aurelia, is entitled to the other 1/4 of the lot. When Marciliano died intestate on March 10, 1986, petitioner Bonifacio Olegario, the only surviving brother of Marciliano, stepped into his shoe. In a contract of sale, consideration is, as a rule, different from the motive of the parties. Consideration is defined as some right, interest, benefit, or advantage conferred upon the promissor, to which he is otherwise not lawfully entitled, or any detriment, prejudice, loss, or disadvantage suffered or undertaken by the promisee other than to such as he is at the time of consent bound to suffer. As contradistinguished, motive is the condition of mind which incites to action, but includes also the inference as to the existence of such condition, from an external fact of a nature to produce such a condition. Under certain circumstances, however, the motive of the parties may be regarded as the consideration when it
predetermines the purpose of the contract. When they blend to that degree, and the motive is unlawful, then the contract entered into is null and void. In the case at bench, the primary motive of Marciliano is selling the controverted 91-square meter lot to private respondents was to illegally frustrate petitioners' right of inheritance and to avoid payment of estate tax. The conclusion is thus inescapable that the purported sale of April 15, 1986 of the subject lot is null and void. Illegal motive predetermined the purpose of the contract. Also, the respondents had no means to pay for the alleged purchase price, as they admitted, that though the acquired a loan from the parish of the amount of 30k, this was used for treatment of their father, and the burial of their mother. Applying Articles 1352 and 1409 of the Civil Code in relation to the indispensable requisite of a valid cause, we hold that the alleged deed of sale is void. Also, it is not registered, and under PD 1529, "[T]he act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned." Decision of lower courts reversed, and civil case dismissed. Lagunzad v Gonzales Lagunzad was initially a newspaper man, who had engaged in the business of producing films for the cinema under the business outfit MML Productions. He had acquired the rights to create a movie based on a book by Rodriguez, entitled “The Long Dark Night in Negros” about Moises Padilla, a mayoralty candidate in Negros in 1961, who was ambushed by Gov. Lacson of the Liberal Party (Padilla was with the Nationalista). He purchased the rights to the movie based on the book from Rodriguez for 2,000.00php. The mother of Padilla, Vda. De Gonzales, learned about this, and with her 2 daughters sought to stop the filming of the movie. A Licensing agreement was entered into by the parties in the Law office of Jalandoni, which stipulates that Lagunzad shall pay the mother 20k for the use of the story of her son and for portraying her and her family in the movie. He is also to pay 2.5% of the profits from the movie. Thereafter, the filming was completed and the movie was shown in cinemas. Lagunzad initially paid only 5,000.00, but refused to pay the remaining 15k, thus, the widow instituted action for execution of the licensing agreement and for Lagunzad to pay her. The lower court and the CA granted the petition. Lagunzad insists that the Licensing Agreement was without valid cause or consideration and that he signed the same only because private respondent threatened him with unfounded and harassing action which would have delayed production; and that he paid private respondent the amount of P5,000.00 in October, 1961, only because of the coercion and threat employed upon him. By way of counterclaim, petitioner demanded that the Licensing Agreement be declared null and void for being without any valid cause; that private respondent be ordered to return to him the amount of P5,000.00; and that he be paid P50,000.00 by way of moral damages, and P7,500.00 as attorney's fees. W/N the licensing agreement was void as petitioner’s consent was obtained by means of duress, intimidation and undue influence. No. While it is true that petitioner had purchased the rights to the book entitled "The Moises Padilla Story," that did not dispense with the need for prior consent and authority from the deceased heirs to portray publicly episodes in said deceased's life and in that of his mother and the members of his family. Being a public figure ipso facto does not automatically destroy in toto a person's right to privacy. The right to invade a person's privacy to disseminate public information does not extend to a fictional or novelized representation of a person, no matter how public a figure he or she may be. The Court found it difficult to sustain petitioner's posture that his consent to the Licensing Agreement was procured thru duress, intimidation and undue influence exerted on him by private respondent and her daughters at a time when he had exhausted his financial resources, the premiere showing of the picture was imminent, and "time was of the essence." It is necessary to distinguish between real duress and the motive, which is present when one gives his consent reluctantly. A contract is valid even though one of the parties entered into it against his own wish and desires, or even against his better judgment. In legal effect, there is no difference between a contract wherein one of the contracting parties exchanges one condition for another because he looks for greater profit or gain by reason of such change, and an agreement wherein one of the contracting parties agrees to accept the lesser of two disadvantages. In either case, he makes a choice free and untramelled and must accordingly abide by it. The Licensing Agreement has the force of law between the contracting parties and since its provisions are not contrary to law, morals, good customs, public order or public policy (Art. 1306, Civil Code), petitioner should comply with it in good faith. The interests observable are the right to privacy asserted by respondent and the right of freedom of expression invoked by petitioner. Taking into account the interplay of those interests, we hold that under the particular circumstances presented, and considering the obligations assumed in the Licensing Agreement entered into by petitioner, the validity of such agreement will have to be upheld particularly because the limits of freedom of expression are reached when expression touches upon matters of essentially private concern. Lower courts’ decision upheld. Law v Olympic Saw Mill
Law loaned 10,000.00php to Olympic Saw Mill and Lee Chi as its president, for which the said amount was to have no interest. The amount became due in January 1960, but the due date was extended to April. In April, no payment was made yet, for which a loan document was executed by the parties, which holds that an additional amount of 6,000.00php was to be paid on top of the principal loan amount to serve as attorney’s fees and other incidental fees and legal interest, to be paid to the lender or his heirs upon termination of the contract. By April 1960, no payment was made yet, and in September, Law instituted action to compel payment of the loan, along with the additional 6,000.00php. This was granted by the trial court after summary judgment. Appeal was made to CA, but refered it to the SC as it concerned purely matters of law. W/N the loan document executed by the parties evidencing the obligation of respondents to pay the 6k is valid and enforceable. Yes. Under Article 1354 of the Civil Code, in regards to the agreement of the parties relative to the P6,000.00 obligation, "it is presumed that it exists and is lawful, unless the debtor proves the contrary". No evidentiary hearing having been held, it has to be concluded that defendants had not proven that the P6,000.00 obligation was illegal. Confirming the Trial Court's finding, we view the P6,000.00 obligation as liquidated damages suffered by plaintiff, as of March 17, 1960, representing loss of interest income, attorney's fees and incidentals. Respondents contend that the said amount is usurious, but it may be recalled that usury is now legally non-existent. The Usury Law cannot be applied to the case. Judgment appealed from is affirmed.
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