Case: SAMAHAN NG MAGSASAKA SA SAN JOSE v.

VALISNO
Doctrine: The action to annul the minors’ redemption was one that could only have been initiated by the
minors themselves, as the victims or the aggrieved parties in whom the law itself vests the right to file
suit. While it is true that a transaction entered into by a party who is incapable of consent is voidable,
such a transaction is valid until annulled. The redemption made by the four petitioners has never been
annulled, thus, it is valid.

Facts
1. Petitioner's
In 1994, Dominador Maglalang, on behalf of the SMSP, filed a petition for coverage of the
subject landholding under the CARL, which petition was dismissed for want of jurisdiction.
The SMSJ, through Dominador Maglalang, opposed the Consolidated Application for
Retention, specifically objecting to the award in favor of the Grandchildren-Awardees because
they are not actually tilling nor directly managing the land in question as required by law.
Petitioners filed a partial motion for reconsideration, assailing the right of retention of the four
Redemptioner-Grandchildren over the 12-hectare property, and praying that an amended
decision be rendered placing the 12 hectares under the coverage of the CARP.

2. Respondent's
After the mortgage on the 12-hectare portion was foreclosed and the property sold at public
auction, four grandchildren of Dr. Nicolas Valisno redeemed the same from the mortgagees.
On September 25, 1997, the Valisno heirs filed a Consolidated Application for Retention and
Award under RA 6657. Respondent's heirs filed a petition for review with the Court of Appeals,
arguing that the Secretary of Agrarian Reform erred (1) in disallowing the award of one hectare
to each of the seven Grandchildren-Awardees of Dr. Nicolas Valisno, as qualified children-
awardees under the CARL; and (2) in not recognizing the redemption made by the four
grandchildren of Dr. Nicolas Valisno over the 12-hectare rice land mortgaged to Renato and
Angelito Banting.

3. Decisions of the lower courts

The Regional Trial Court director issued an Order dated January 2, 1996, declaring the
Valisno property exempt from PD 27 coverage and RA 6657. This was reversed by then
Secretary Garilao, who held that the Comprehensive Agrarian Reform Program covers the
property, subject to the retention rights of the heirs of Nicolas, Sr. The RTC Director Renato
Herrera issued an Order which pertinently reads: 1. Granting the application for retention of the
heirs of Dr. Nicolas Valisno, Sr. of not more than five hectares each or a total of 35 hectares
(Title Nos. 118446, 118443, 118442, 118440, 118445, 118441 and 118444, respectively) all located
at La Fuente, Sta. Rosa, Nueva Ecija; 2. Placing the excess of 19 hectares, more or less,
under RA 6657 and acquiring the same thru Compulsory Acquisition for distribution to
qualified farmer-beneficiaries taking into consideration the basic qualifications set forth by law;
3. Denying the request for the award to children of the applicants for utter lack of merit; and 4.
Directing the applicants-heirs to cause the segregation and survey of the retained area at their
own expense and to submit within thirty days the final approved survey plan to this Office.
The Court of Appeals reversed the Orders of the DAR Secretary, granted the award of one
hectare each for the seven Grandchildren-Awardees, and affirmed the retention rights of the
Redemptioner-Grandchildren over three hectares each, or a total of 12 hectares.

Issue
Whether or not the contract entered into by the minors is void

Ruling
No, the relevant laws governing the minors’ redemption in 1973 are the general Civil Code
provisions on the legal capacity to enter into contractual relations, wherein Article 1327 of the
Civil Code provides that minors are incapable of giving consent to a contract and Article 1390
provides that a contract where one of the parties is incapable of giving consent is voidable or
annullable. Thus, the redemption made by the minors in 1973 was merely voidable or
annullable, and was not void ab initio, as petitioners argue.

Any action for the annulment of the contracts thus entered into by the minors would require
that: (1) the plaintiff must have an interest in the contract, and (2) the victim must bring the
action and not the party responsible for the defect. Article 1397 of the Civil Code provides in
part that "[t]he actions for the annulment of contracts may be instituted by all who are thereby
obliged principally or subsidiarily; persons who are capable cannot allege the incapacity
of those with whom they contracted." The action to annul the minors’ redemption in 1973,
therefore, was one that could only have been initiated by the minors themselves, as the
victims or the aggrieved parties in whom the law itself vests the right to file suit, and this action
was never initiated by the minors.

Case: MALABANAN v. GAWCHING

Doctrine: He who is not the party obligated principally or subsidiarily in a contract may perhaps be
entitled to exercise an action for nullity, if he is prejudiced in his rights with respect to one of the
contracting parties; but, in order that such be the case, it is indispensable to show the detriment which
positively would result to him from the contract in which he had no intervention.

Facts
1. Gaw Ching has been leasing the house and lot in Binondo from Mr. Jabit since 1951.
When Mr. Jabit died, his daughter continued to lease the premises to the plaintiff. On
April 27, 1980, Angelina Malabanan told him that she was selling the house and lot for
P5,000.00/sqm, however, Gaw Ching said that the price was not agreeable. He tried to
pay the rentals, but Malabanan refused to accept it, so upon consul ng with his lawyer,
the same was deposited in a bank. Gaw Ching received another le er from Malabanan
which stated that if he were not agreeable to the P5000/sqm price, she would sell the
premises to another person at P4,000.00/sqm. He did not reply to her letter. Later that
year, Gaw Ching received a letter stating that the premises had been sold to Leonida
 Senolos. Gaw Ching asked for a copy of the sale, but they have not furnished it. Later on,
Gaw Ching received a letter, demanding that he vacate the premises and pay the
arrearages in rentals from October to December, as they were going to repair and
convert the dwelling into a warehouse. He refused to leave, however, and the building
was demolished with them still living there. The claim for damages stems from the
incident wherein the building was demolished while Gaw Ching and his family were
still in the building, with him claiming that the demolition team caused the destruction
and loss of his personal property.
2. The trial court upheld the validity of the contract of sale between petitioner Malabanan
and petitioner Senolos. The trial court declared that petitioner Malabanan had not
violated Presidential Decree No. 1517, which provides a preemptive right on the part of
a lessee over the leased property. The trial court stressed that respondent Gaw Ching
had been given ample opportunity to exercise any right of first refusal he might have
had, but he had chosen not to do so.

Issue
Whether or not the CA erred in ruling for the annulment of the deed of sale and a grant for
damages.

Ruling

The Court Resolved to GRANT the Petition and to REVERSE and SET ASIDE the Decision of
the then Intermediate Appellate Court, and the decision of the Trial Court is reinstated.

There is a limitation of the right of a person injured by a contract between two (2) third parties
to sue to nullify that contract, which is that contract may be nullified only to the extent
necessary to protect the plaintiff’s lawful rights. Respondent Gaw Ching does not fall within the
possible exception, as he had no legal right of preemption in respect of the house and lot
involved. The redemptive rights of a lessee under P.D. No. 1517 exist only in respect of one who
built his house on someone else’s lot and lived there for more than 10 years. In this case, where
both land and building belong to the lessor, that redemptive right was simply not available
under the law. Moreover, it must be stressed that petitioner Malabanan ordered the land three
times to Gaw Ching but the latter had consistently refused to buy. Since Gaw Ching did not in
fact accept the offer to sell and did not buy the land, he suffered no prejudice nor fraud from the
sale. Moreover, the order of condemnation or demolition had been issued by the proper
authorities which order was valid and subsisting at the time the demolition was actually carried
out. Gaw Ching had ample notice of the demolition order and had adequate time to remove his
belongings from the premises if he minded obeying the order for demolition. He chose not to
obey that order. If he did su er any losses — the trial court did not believe his claims that he did
— he had only himself to blame.

Case: CARANTES v. COURT OF APPEALS

Doctrine: Art 1391 provides that an action for annulment must be brought within FOUR (4) years. If
the ground is a fraud, its prescriptive period is four years from the time of the discovery of the fraud. If
the ground is intimidation/violence/undue influence, its prescriptive period is from the time the defect of
the consent ceases)

Facts
Mateo Carantes was the original owner of a certain parcel of land. When he died, he was
survived by his wife and six children. Subsequently, the parcel of land was subjected to
expropriation and was later on indeed expropriated. A deed denominated as Assignment of
Right of Inheritance was executed by four of Mateo’s children assigning Maximo Carantes their
rights to inheritance over the lot. Maximo then sold the remaining lots to the government and
also registered on Mar. 16, 1940, the deed of Assignment of Right to Inheritance. The still
remaining lot was issued in the name of Maximo. A complaint was filed against Maximo
alleging that the deed be annulled on the ground of fraud. The trial court rendered a decision
stating that the plaintiff’s right of action has been prescribed. The CA reversed the decision.

Issue
Whether or not the plaintiff’s right of action has been prescribed.

Ruling
The present action, being one to annul the contract on the ground of fraud, its prescriptive
period is four years from the time of the discovery of the fraud. The weight of authorities is to
effect that the registration of an instrument in the Office of the Register of Deeds constitutes
constructive notice to the whole world, and therefore, the discovery of the fraud is deemed to
have taken place at the time of the registration. In this case, the deed of assignment was
registered on Mar. 16, 1940. The four-year period within which the private respondents could
have filed the present action consequently commenced on Mar. 16, 1940; and since they filed it
only on Sept. 4, 1958, it follows that the same is barred by the statute of limitations.