3.) RODOLFO G.

CRUZ and ESPERANZA IBIAS,

vs. ATTY. DELFIN GRUSPE

G.R. No. 191431, March 13, 2013

Facts:

The claim arose from an accident when the mini bus owned and operated by Cruz and
driven by one Arturo Davin collided with the Toyota Corolla car of Gruspe; Gruspe’s car was a
total wreck. The next day,Cruz, along with Leon ardo Q. Ibias went to Gruspe’s office,
apologized for the incident, and executed a Joint Affidavit of Undertaking promising jointly and
severally to replace the Gruspe’s damaged car in 20 days, or until November 15, 1999, of the
same model and of at least the same quality; or, alternatively, they would pay the cost of
Gruspe’s car amounting to P350,000.00, with interest at 12% per month for any delayed
payment after November 15, 1999, until fully paid. When Cruz and Leonardo failed to comply
with their undertaking, Gruspe filed a complaint for collection of sum of money against them.

Cruz and Leonardo denied Gruspe’s allegation, claiming that Gruspe, a lawyer, prepared
the Joint Affidavit of Undertaking and forced them to affix their signatures thereon, without
explaining and informing them of its contents.

Issue:

Whether or not the Joint Affidavit of Undertaking is a contract that can be the basis of an
obligation to pay a sum of money.

Held:

A simple reading of the terms of the Joint Affidavit of Undertaking readily discloses that it
contains stipulations characteristic of a contract. Contracts are obligatory no matter what their
forms may be, whenever the essential requisites for their validity are present. In determining
whether a document is an affidavit or a contract, the Court looks beyond the title of the
document, since the denomination or title given by the parties in their document is not
conclusive of the nature of its contents. In the construction or interpretation of an instrument, the
intention of the parties is primordial and is to be pursued. If the terms of the document are clear
and leave no doubt on the intention of the contracting parties, the literal meaning of its
stipulations shall control. If the words appear to be contrary to the parties’ evident intention, the
latter shall prevail over the former.

The Joint Affidavit of Undertaking contained a stipulation where Cruz and Leonardo
promised to replace the damaged car of Gruspe, 20 days from October 25, 1999 or up to
November 15, 1999, of the same model and of at least the same quality. In the event that they
cannot replace the car within the same period, they would pay the cost of Gruspe’s car in the
total amount of P350,000.00, with interest at 12% per month for any delayed payment after
November 15, 1999, until fully paid. These, are very simple terms that both Cruz and Leonardo
could easily understand. An allegation of vitiated consent must be proven by preponderance of
evidence; Cruz and Leonardo failed to support their allegation.
 83.) Rowena Salonte v. COA

G.R. No. 207348, 19 August 2014; Velasco Jr., J.

FACTS:

The City of Mandaue and F.F. Cruz Inc. entered into a Contract of Reclamation with
land-sharing agreement to be undertaken by the latter. The project was estimated to be
completed within six (6) years as stipulated in the contract. The parties executed an MOA
wherein all improvements by the F.F. Cruz on the City’s portion of the land shall belong to the
latter after project completion. The project was not completed within 6 years. Thereafter, the
DPWH contracted with F.F. Cruz to demolish improvements on the City’s parcel of land for a
road-widening project. Petitioner Solante, prepared disbursement vouchers in favor of F.F. Cruz
as payment for the demolished improvements. COA disallowed the disbursement, stating that
the failure of FF. Cruz to finish the project within 6 years means the project is deemed
completed and that the City now owns the rights to the demolished improvements, hence, F.F.
Cruz cannot collect payments from the demolition of the same.

ISSUE:

WON F.F. Cruz owned the improvements demolished.

RULING:

Yes. F.F. Cruz owned said properties and can collect the payments for their demolition.

SC ruled that a mere estimate of a period of project completion does not fall under the definition
of a fixed period or day certain as defined in law.  Art. 1193 of the Civil Code provides that:
“Obligations for whose fulfillment a day certain has been fixed, shall be demandable only when
that day comes; Obligations with a resolutory period take effect at once, but terminate upon
arrival of the day certain; A day certain is understood to be that which must necessarily come,
although it may not be known when; If the uncertainty consists in whether the day will come or
not, the obligation is conditional, and it shall be regulated by the rules of the preceding Section.”

The lapse of the estimated 6-year period did not deem the project completed much less bring
about the fulfillment of the condition stipulated in the MOA (on the shift of ownership over the
demolished properties). As it were, the Mandaue-F.F.Cruz MOA states that the structures built
by F .F. Cruz on the property of the city will belong to the latter only upon the completion of the
project. Clearly, the completion of the project is a suspensive condition that has yet to be
fulfilled. Until the condition arises, ownership of the structures properly pertains to F.F. Cruz.
Petition is granted.

43.) Felix Gonzales vs. The Heirs of Thomas

 314 SCRA 585 (1999); Panganiban, J.

When the consent of a party to a contract is given subject to the fulfillment of a suspensive condition, the
contract is not perfected unless that condition is first complied with.—Condition has been defined as
“every future and uncertain event upon which an obligation or provision is made to depend. It is a future
and uncertain event upon which the acquisition or resolution of rights is made to depend by those who
execute the juridical act.” Without it, the sale of the property under the Contract cannot be perfected, and
petitioner cannot be obliged to purchase the property. “When the consent of a party to a contract is given
subject to the fulfillment of a suspensive condition, the contract is not perfected unless that condition is
first complied with.”

The obligatory force of a conditional obligation is subordinated to the happening of a future and uncertain
event, so that if that event does not take place, the parties would stand as if the conditional obligation had
never existed. There can be no rescission of an obligation as yet non-existent, because the suspensive
condition has not happened.

FACTS:

On December 1, 1983, Paula Ao Cruz together with the plaintiffs heirs of Thomas and
Paula Cruz, entered into a Contract of Lease/Purchase with the defendant, Felix L. Gonzales, a
certain parcel of land. The defendant Gonzales paid the annual rental on the half-portion of the
property covered by Transfer Certificate of Title No. 12111 in accordance with the second
provision of the Contract of Lease/Purchase and thereafter took possession of the property,
installing thereon the defendant Jesus Sambrano as his caretaker. The defendant Gonzales did
not, however, exercise his option to purchase the property immediately after the expiration of
the one-year lease. He remained in possession of the property without paying the purchase
price provided for in the Contract of Lease/Purchase and without paying any further rentals
thereon.

A letter was sent by one of the plaintiffs-heirs to the defendant Gonzales informing him
of the lessors decision to rescind the Contract of Lease/Purchase due to a breach thereof
committed by the defendant which also served as a demand on the defendant to vacate the
premises within 10 days from receipt of said letter. However, the defendant refused to vacate
the property and continued possession thereof.

Alleging breach of the provisions of the Contract of Lease/Purchase, the plaintiffs filed a
complaint for recovery of possession of the property – subject of the contract with damages,
both moral and compensatory and attorney’s fees and litigation expenses. The defendant
Gonzales filed his answer praying for a dismissal of the complaint filed against him and an
award of moral, exemplary and actual damages, as well as litigation expenses.

The trial court rendered a decision in favor of the defendant. It held that he failure of the
plaintiffs to secure the Transfer Certificate of Title, as provided for in the contract, does not
entitle them to rescind the contract. The plaintiff appealed to the Court of Appeals which
reversed the decision of the Trial Court. Hence, this petition.

ISSUE:
 Whether or not the express stipulation of the contract which is to secure the Transfer
Certificate of Title a condition precedent before the petitioner could exercise his option to buy
the property.

RULING:

Yes, it is a condition precedent. If a stipulation in a contract admits of several meanings,

it shall be understood as bearing that import most adequate to render it effectual. An obligation
cannot be enforced unless the plaintiff has fulfilled the condition upon which it is premised.
Hence, an obligation to purchase cannot be implemented unless and until the sellers have
shown their title to the specific portion of the property being sold.
We hold that the ninth provision was intended to ensure that respondents would have a valid
title over the specific portion they were selling to petitioner. Only after the title is assured may
the obligation to buy the land and to pay the sums stated in the Contract be enforced within the
period stipulated. Verily, the petitioners obligation to purchase has not yet ripened and cannot
be enforced until and unless respondents can prove their title to the property subject of the
Contract.

Therefore, respondents cannot rescind the contract, because they have not caused the transfer
of the TCT to their names, which is a condition precedent to petitioners obligation. This Court
has held that there can be no rescission (or more properly, resolution) of an obligation as yet
non-existent, because the suspensive condition has not happened.

CONTRACTS

14. RIDO MONTECILLO, Petitioner, v. IGNACIA REYNES and SPOUSES

REDEMPTOR and ELISA ABUCAY, Respondents.

G.R. No.138018. July 26, 2002; Carpio, J.

Art. 1318 - Requisites of Contract

The right of a minor to rescind, upon attaining his majority, a contract entered into during his
minority is subject to the conditions (1) that the election to rescind must be made within a reasonable time
after majority and (2) that all of the consideration which was in the minor's possession upon his reaching
majority must be returned. The disposal of any part of the consideration after the attainment of majority
imports an affirmance of the contract. Not only should plaintiff have refunded all moneys in his
possession upon filing his action to rescind, but, by insisting upon receiving and spending such
consideration after reaching majority, knowing the righconferred upon him by law, he must be held to
have forfeited any right to bring such action.

14. RIDO MONTECILLO, Petitioner, vs. IGNACIA REYNES and SPOUSES REDEMPTOR and ELISA
ABUCAY, Respondents.

G.R. No. 138018, THIRD DIVISION, July 26, 2002, CARPIO, J.:
  

Where the deed of sale states that the purchase price has been paid but in fact has never been paid,
the deed of sale is null and void ab initio for lack of consideration. A contract of sale is void and
produces no effect whatsoever where the price, which appears thereon as paid, has in fact never been
paid by the purchaser to the vendor. Such a sale is non-existent or cannot be considered consummated.

FACTS:

Respondents Ignacia Reynes (Reynes for brevity) and Spouses Abucay (Abucay Spouses for
brevity) filed on June 20, 1984 a complaint for Declaration of Nullity and Quieting of Title against
petitioner Rido Montecillo (Montecillo for brevity). Reynes asserted that she is the owner of a lot
situated in Mabolo, Cebu City, covered by Transfer Certificate of Title No. 74196 and containing an
area of 448 square meters (Mabolo Lot for brevity). In 1981, Reynes sold 185 square meters of the
Mabolo Lot to the Abucay Spouses who built a residential house on the lot they bought.

Reynes further alleged that Montecillo failed to pay the purchase price after the lapse of the
one-month period, prompting Reynes to demand from Montecillo the return of the Deed of Sale.
Since Montecillo refused to return the Deed of Sale, Reynes executed a document unilaterally
revoking the sale and gave a copy of the document to Montecillo.

  Reynes and the Abucay Spouses argued that for lack of consideration there (was) no
meeting of the minds between Reynes and Montecillo. Thus, the trial court should declare null and
void ab initio Montecillos Deed of Sale, and order the cancellation of Certificate of Title No. 90805 in
the name of Montecillo.

ISSUE:

Whether or not the deed of sale is void ab initio. (YES)

RULING:

Under Article 1318 of the Civil Code, [T]here is no contract unless the following requisites
concur: (1) Consent of the contracting parties; (2) Object certain which is the subject matter of the
contract; (3) Cause of the obligation which is established. Article 1352 of the Civil Code also
provides that Contracts without cause produce no effect whatsoever.

  On its face, Montecillos Deed of Absolute Sale appears supported by a valuable

consideration. However, based on the evidence presented by both Reynes and Montecillo, the trial
court found that Montecillo never paid to Reynes, and Reynes never received from Montecillo, the
P47,000.00 purchase price. There was indisputably a total absence of consideration contrary to
what is stated in Montecillos Deed of Sale. As pointed out by the trial court.

Where the deed of sale states that the purchase price has been paid but in fact has never
been paid, the deed of sale is null and void ab initio for lack of consideration. A contract of sale is
void and produces no effect whatsoever where the price, which appears thereon as paid, has in fact
never been paid by the purchaser to the vendor. Such a sale is non-existent) or cannot be
considered consummated.

66. Uy Soo Lim v. Tan Unchuan

G.R. No. 12605, 7 September 1918; Fisher, J.

The right of a minor to rescind, upon attaining his majority, a contract entered into during his
minority is subject to the conditions (1) that the election to rescind must be made within a reasonable time
after majority and (2) that all of the consideration which was in the minor's possession upon his reaching
majority must be returned. The disposal of any part of the consideration after the attainment of majority
imports an affirmance of the contract.

Not only should plaintiff have refunded all moneys in his possession upon filing his action to
rescind, but, by insisting upon receiving and spending such consideration after reaching majority,
knowing the rights conferred upon him by law, he must be held to have forfeited any right to bring such
action.

FACTS:

Santiago Pastrano Uy Toco, a Chinese, came to the Philippines and married Candida
Vivares, a Filipina. They had two daughters, Francisca and Concepcion. At the time of this marriage,
Santiago Pastrano possessed very little property — a tienda worth about P2,000. However, when he
died, his wealth amassed to a large estate that he acquired with Candida. Santiago stayed in China
for less than a year and had an affair with Chan Quieng, who later claimed that what they did in
China was equivalent to a marriage in Chinese law and customs.

Santiago and Quieng never saw each other again but she wrote him letters that she bore
him a son, plaintiff Uy Soo Lim. Believing this, Santiago allegedly dedicated to Uy Soo Lim a large
amount in his will — 7/9. Uy  Soo   Lim, while still a minor, thereafter, executed a deed of sale
to Francisa, concomitantly, relinquishing all his right, title, and interest in the estate. Chan Quieng
gave her consent to the sale. Francisca was then declared as the sole owner of all the properties of
Uy Soo Lim. The latter then spent all the money.

Thereafter, when he was of age, Uy Soo Lim sought to rescind and annul the contract

by which he has sold and transferred to Francisca all his interest in the estate alleging that undue
influence was exercised upon him, taking advantage of his youth.

ISSUE:

Whether or not Uy Soo Lim can file for the annulment of the contract.

RULING:

No. Positive statutory law, no less than uniform court decisions, require, as a condition
precedent to rescission of a contract on account of minority that the consideration received be
refunded. We cite and quote as follows:
 ART. 1295 (Civil Code). Rescission obliges the return of the things which were the objects of
the contract, with their fruits and the sum with interest; therefore it can only be carried into effect
when the person who may have claimed it can return that which, on his part, he is bound to do.

ART. 1304 (Civil Code). When the nullity arises from the incapacity of one of the contracting
parties, the incapacitated person is not obliged to make restitution, except to the extent he has
profited by the thing or by the sum he may have received.

ART. 1308 (Civil Code). While one of the contracting parties does not return that which he is
obliged to deliver by virtue of the declaration of nullity, the other cannot be compelled to fulfill, on his
part, what is incumbent on him.

Knowing his legal rights, therefore, plaintiff should have been prompt to disaffirm his contract
upon reaching majority. This was not done. Instead, he deliberately permitted defendants to continue
making payments thereunder, and then, on May 25, 1914, when the last cent upon such contract
was collected, sought to avail himself of this ground of rescission. This was almost eight months
after he had attained his majority.