CASE NO. 34 – MANDARIN VILLA, INC. VS.

CA ANF CLODUALDO DE JESUS

GR NO. 175483; October 14, 2015
TOPIC: STIPULATION POUR AUTRI
FACTS: Private respondent, Clodualdo de Jesus, a practicing lawyer and businessman, hosted a
dinner for his friends at the petitioner's restaurant, the Mandarin Villa Seafoods Village Greenhills,
Mandaluyong City. After dinner the waiter handed to him the bill in the amount of P2,658.50. Private
respondent offered to pay the bill through his credit card issued by Philippine Commercial Credit
Card Inc. (BANKARD). This card was accepted by the waiter who immediately proceeded to the
restaurant's cashier for card verification.
Ten minutes later, however, the waiter returned and audibly informed private respondent that
his credit card had expired. Private respondent remonstrated that said credit card had yet to expire on
September 1990, as embossed on its face. The waiter was unmoved, thus, private respondent and two
of his guests approached the restaurant's cashier who again passed the credit card over the
verification computer. The same information was produced, i.e., CARD EXPIRED.

Thereupon, private respondent left the restaurant and got his BPI Express Credit Card from his
car and offered it to pay their bill. This was accepted and honored by the cashier after
verification. Petitioner and his companions left afterwards.

The incident triggered the filing of a suit for damages by private respondent.

RTC ruled in favor of respondent and awarded moral, exemplary damages and attorneys fees;
CA modified RTC’s decision absolving BANKARD of any responsibility for damages and finding
petitioner as the sole responsible for damages in favor of appellee.
ISSUE: WON PETITIONER IS BOUND TO ACCEPT PAYMENT BY MEANS OF CREDIT
CARD;
RULING: YES, by virtue of stipulation pour autri.
In an agreement entered into by Mandarin Villa with Bankard, it provides that it shall honor
validly issues PCCI credit cards presented by their corresponding holder in the purchase of goods
and/or services supplied by it provided that the card expiration date has not elapsed and the card
number does not appear on the latest cancellation bulletin of lost, suspended and canceled PCCCI
credit cards and, no signs of tampering, alterations or irregularities appear on the face of the credit
card.
While private respondent, may not be a party to the said agreement, the above-quoted
stipulation conferred a favor upon the private respondent, a holder of credit card validly issued by
BANKARD. This stipulation is a stipulation pour autri and under Article 1311 of the Civil Code private
respondent may demand its fulfillment provided he communicated his acceptance to the petitioner
before its revocation.8 In this case, private respondent's offer to pay by means of his BANKARD credit
card constitutes not only an acceptance of the said stipulation but also an explicit communication of
his acceptance to the obligor.

PETITION DENIED.
 CASE NO. 35 – BPI EXPRESS CARD CORPORATION VS. MA. ANTONIA ARMOVIT
GR NO 163654; OCTOBER 8, 2014
TOPIC: CONTRACTUAL RELATIONSHIP
FACTS:Ma. Antonia Armovit, herein respondent, treated her British friends to lunch at a restaurant.
She handed to the waiter her BPI Express Credit Card to settle the bill but to her astonishment, the
waiter returned and informed that her card had been cancelled upon verification with the BPI Express
Credit (BPI). Armoit called BPI and the latter told her that her credit card had been summarily
cancelled for failure to pay her outstanding obligations. She denied having defaulted on her payments
and demanded for compensation for the shame and embarrassment she suffered. BPI claimed that it
sends Armovit a telegraphic message requesting her to pay her arrears for three consecutive months.
As she did not comply with the request, it temporarily suspended her credit card with due notice to
her. BPI further claimed that Armovit failed to submit the required application form in order to
reactivate her credit card privileges.
Later on, Armovit received a telegraphic message from BPI apologizing for its error of
inadvertently including her credit card in Caution List sent to its affiliated merchants. Armovit sued
BPI for damages insisting that she had been a credit card incident. RTC ordered BPI to pay Armovit
moral, exemplary and attorneys fees for each in the amount of 10k which CA affirmed.
ISSUE: WON THERE IS CONTRACTUAL RELATIONSHIP BETWEEN CREDIT CARD
ISSUER AND THE CREDIT CARD HOLDER;
RULING: Yes, the relationship between the credit card issuer and the credit card holder is a
contractual one that is governed by the terms and conditions found in the card membership
agreement. Such terms and conditions constitute the law between the parties. In case of their breach,
moral damages may be recovered where the defendant is shown to have acted fraudulently or in bad
faith.
The Terms and Conditions Governing the Issuance and Use of the BPI Express Credit Card22
printed on the credit card application form spelled out the terms and conditions of the contract
between BPI Express Credit and its card holders, including Armovit. Such terms and conditions
determined the rights and obligations of the parties.23 Yet, a review of such terms and conditions did
not reveal that Armovit needed to submit her new application as the antecedent condition for her
credit card to be taken out of the list of suspended cards.
 CASE NO. 36 – ECE REALTY AND DEVELOPMENT, INC. VS. RACHEL MANDAP
GR NO 196182; SEPTEMBER 1, 2014
TOPIC: FRAUD - CONTRACTS
FACTS: Petitioner is a corporation engaged in the building and development of condominium units.
Sometime in 1995, it started the construction of a condominium project called Central Park
Condominium Building located along Jorge St., Pasay City. However, printed advertisements were
made indicating therein that the said project was to be built in Makati City. In December 1995,
respondent, agreed to buy a unit from the above project by paying a reservation fee and, thereafter,
downpayment and monthly installments. On June 18, 1996, respondent and the representatives of
petitioner executed a Contract to Sell. In the said Contract, it was indicated that the condominium
project is located in Pasay City.
More than two years after the execution of the Contract to Sell, respondent, through her
counsel, wrote petitioner a letter dated October 30, 1998 demanding the return of ₱422,500.00,
representing the payments she made, on the ground that she subsequently discovered that the
condominium project was being built in Pasay City and not in Makati City as indicated in its printed
advertisements.
Respondent filed a complaint with the Expanded National Capital Region Field Office
(ENCRFO) of the Housing and Land Use Regulatory Board (HLURB) seeking the annulment of her
contract with petitioner, the return of her payments, and damages, but was dismissed. Respondent
filed a petition for review with the HLURB Board of Commissioners questioning the decision of the
ENCRFO, but was again dismissed. Aggrieved, respondent filed an appeal with the Office of the
President. On June 21, 2007, the Office of the President dismissed respondent's appeal and affirmed
in toto the decision of the HLURB Board of Commissioners.
On appeal with CA, it reversed the resolution of the OP on the ground that petitioner employed
fraud and machinations to induce respondent to enter into a contract with it. The CA also expressed
doubt on the due execution of the Contract to Sell between the parties.

ISSUE: ON PETITIONER WAS GUILTY OF FRAUD; WON SUCH FRAUD IS

SUFFICIENT TO NULLIFY THE CONTRACT
RULING: NONE.
Article 1338 of the Civil Code provides that "[t]here is fraud when through insidious words or
machinations of one of the contracting parties, the other is induced to enter into a contract which,
without them, he would not have agreed to."

In addition, under Article 1390 of the same Code, a contract is voidable or annullable "where
the consent is vitiated by mistake, violence, intimidation, undue influence or fraud."

Also, Article 1344 of the same Code provides that "[i]n order that fraud may make a contract
voidable, it should be serious and should not have been employed by both contracting parties."
Jurisprudence has shown that in order to constitute fraud that provides basis to annul contracts, it
must fulfill two conditions.
 First, the fraud must be dolo causanteor it must be fraud in obtaining the consent of the
party.16 This is referred to as causal fraud. The deceit must be serious. The fraud is serious when it is
sufficient to impress, or to lead an ordinarily prudent person into error; that which cannot deceive a
prudent person cannot be a ground for nullity.17 The circumstances of each case should be
considered, taking into account the personal conditions of the victim.18

Second, the fraud must be proven by clear and convincing evidence and not merely by a
preponderance thereof.

In the present case, this Court finds that petitioner is guilty of false representation of a fact.
This is evidenced by its printed advertisements indicating that its subject condominium project is
located in Makati City when, in fact, it is in Pasay City. The Court agrees with the Housing and Land
Use Arbiter, the HLURB Board of Commissioners, and the Office of the President, in condemning
petitioner's deplorable act of making misrepresentations in its advertisements and in issuing a stern
warning that a repetition of this act shall be dealt with more severely. However, insofar as the present
case is concerned, the Court agrees with the Housing and Land Use Arbiter, the HLURB Board of
Commissioners, and the Office of the President, that the misrepresentation made by petitioner in its
advertisements does not constitute causal fraud which would have been a valid basis in annulling the
Contract to Sell between petitioner and respondent.

In any case, even assuming that petitioner’s misrepresentation consists of fraud which could be
a ground for annulling their Contract to Sell, respondent's act of affixing her signature to the said
Contract, after having acquired knowledge of the property's actual location, can be construed as an
implied ratification thereof.

Ratification of a voidable contract is defined under Article 1393 of the Civil Code as follows:

Art. 1393. Ratification may be effected expressly or tacitly. It is understood that there is a tacit
ratification if, with knowledge of the reason which renders the contract voidable and such reason
having ceased, the person who has a right to invoke it should execute an act which necessarily implies
an intention to waive his right.

Implied ratification may take diverse forms, such as by silence or acquiescence; by acts showing
approval or adoption of the contract; or by acceptance and retention of benefits flowing therefrom.

Under Article 1392 of the Civil Code, "ratification extinguishes the action to annul a voidable
contract." In addition, Article 1396 of the same Code provides that "ratification cleanses the contract
from all its defects from the moment it was constituted."
CASE NO. 44 - VALENTINA CLEMENTE VS CA AND ANNIE SHOTWELL JALANDOON,
ET. AL
GR NO. 175483; October 14, 2015

TOPIC: SIMULATED CONTRACTS

FACTS: Adela, the grandmother of herein respondents, owned three (3) adjoining parcels of land in
Quezon City. During her lifetime, Adela allowed her children the use and possession of the Properties
and its improvements.
However, before Adela went to the US, she executed a deed of absolute sale over Lots 32 and
34, and their improvements, in favor of petitioner, at the price of 250,000.00. At the same time,
Adela also executed a special power of attorney (SPA) in favor of petitioner, authorizing petitioner to
administer, take charge and manage Adela’s properties in the Philippines, for Adela’s benefit.
Adela and petitioner left for the United States. After
sometime, ,,,,,.,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,petitioner returned to the Philippines, she
registered the sale over Lots 32 and 34 with the Registry of Deeds. After a year Adela died in the US
and was succeeded by her 4 children.
Soon thereafter, petitioner having transferred to her name the properties of Adela, sought to
eject 2 of Adela’s children, Annie and Carlos Sr., who were then staying on the Properties. Only then
did Annie and Carlos Sr. learn of the transfer of titles to petitioner.
Respondents then filed a complaint for reconveyance of property against petitioner as they
alleged that no consideration was given by petitioner to Adela in exchange for the simulated
conveyances.
RTC ruled in favor of respondents. CA affirmed.
ISSUE: WON CA ERRED IN RULING THAT THE DEED OF ABSOLUTE SALE IS
SIMULATED AND WITHOUT CONSIDERATION, HENCE VOID AND INEXISTENT
RULING: No, CA is correct. The deed of Absolute Sale between petitioner and the late
Adela Shotwell was NULL AND VOID for lack of consent and consideration.

In the case at bar, there was no valid contract of sale between petitioner and Adela because
their consent was absent. The contract of sale was a mere simulation.

Under the New Civil Code, Simulation takes place when the parties do not really want the
contract they have executed to produce the legal effects expressed by its wordings. Article 1345 of the
Civil Code provides that the simulation of a contract may either be absolute or relative. The former
takes place when the parties do not intend to be bound at all; the latter, when the parties conceal their
true agreement.
In affirming the ruling of the lower courts that the Deeds of Absolute Sale were absolutely
simulated, the lower courts considered the totality of the prior, contemporaneous and subsequent acts
of the parties, and that petitioner’s letter to her cousin Dennis sufficiently establishes that Adela
retained control over the Properties, even after the execution of the Deeds of Absolute Sale. Petitioner
herself admitted that she was only following the orders of Adela in the management and
administration of the latter’s property, and that she has no claim over the Properties.
 Further, on the issue of lack of consideration, the lower court founds that there was no money
involved in the sale. The consideration in the Deeds of Absolute Sale was superimposed on the spaces
therein, bearing a font type different from that used in the rest of the document. Article 1471 of the
Civil Code provides that "if the price is simulated, the sale is void." Where a 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
for lack of consideration. Thus, although the contracts state that the purchase price of 250,000.00
and 60,000.00 were paid by petitioner to Adela for the Properties, however, petitioner did not
present proof that she paid for the Properties
PETITION IS DENIED.