Quiros and Villegas vs. Arjona et. al.

PROCESO QUIROS and LEONARDA VILLEGAS vs. MARCELO ARJONA, TERESITA

BALARBAR, JOSEPHINE ARJONA, and CONCHITA ARJONA
G.R. No. 158901. 9 March 2004.
Petition for review of the decision of the CA
Ynares-Santiago, J.:

Facts: In Dec 1996, petitioners Proceso Quiros and Leonarda Villegas filed with the office of the
barangay captain of Labney, San Jacinto, Pangasinan, a complaint for recovery of ownership and
possession of a parcel of land located at Labney, San Jacinto, Pangasinan. Petitioners sought to
recover from their uncle Marcelo Arjona, one of the respondents herein, their lawful share of the
inheritance from their late grandmother Rosa Arjona Quiros alias Doza. In 1997, an amicable
settlement was reached between the parties. By reason thereof, respondent Arjona executed a
document denominated as "PAKNAAN" ("Agreement", in Pangasinan dialect).
Petitioners filed a complaint with the MCTC with prayer for the issuance of a writ of execution of
the compromise agreement which was denied because the subject property cannot be determined
with certainty. The RTC reversed the decision of the municipal court on appeal and ordered the
issuance of the writ of execution. Respondents appealed to the CA, which reversed the decision of
the RTC and reinstated the decision of the MCTC.

Issue: WON CA erred in reversing the decision of the RTC and reinstating that of the MCTC.

Ruling: Petition denied.

Generally, the rule is that where no repudiation was made during the 10-day period, the amicable
settlement attains the status of finality and it becomes the ministerial duty of the court to
implement and enforce it. However, such rule is not inflexible for it admits of certain exceptions. In
the case at bar, the ends of justice would be frustrated if a writ of execution is issued considering
the uncertainty of the object of the agreement. To do so would open the possibility of error and
future litigations.
Both parties acknowledge that petitioners are entitled to their inheritance, hence, the remedy of
nullification, which invalidates the Paknaan, would prejudice petitioners and deprive them of their
just share of the inheritance. Respondent cannot, as an afterthought, be allowed to renege on his
legal obligation to transfer the property to its rightful heirs. A refusal to reform the Paknaan under
such circumstances would have the effect of penalizing one party for negligent conduct, and at the
same time permitting the other party to escape the consequences of his negligence and profit
thereby. No person shall be unjustly enriched at the expense of another.
INVESTOR FINANCE CORPORATION VS.COURT OF APPEALS,RICHMANN TRACTORS,
INC., RICARDO B. PAJARILLAGA, ELLA P. PAJARILLAGA, JOHN DOE, RICHARD DOE AND
PETER DOE G.R. NO. 91334, FEBRUARY 7, 1991 PONENTE: GUERRERO, J. TOPIC:
INTERPRETATION OF CONTRACTS
FACTS: Before April 30, 1974, private respondents (Richmann Tractors Inc. is a corporation of the
Pajarillagas with Ricardo Pajarillaga as president)1 were the owners of certain construction
equipment, and, being in need of financing (for the operation of their construction and logging
business)2 they went to the Investors' Finance Corporation (or FNCB Finance) with their
equipment as collateral. In the appropriate documents3 which were executed, it was made to
appear that FNCB was the owner of the equipments and that private respondents were merely
leasing them. As a consideration for the lease, private respondents were to pay monthly
amortizations (over a period of 36 months).4 So that on April 30, 1974, petitioner FNCB Finance
and respondent Richmann Tractors, Inc. executed a "Lease Agreement" (Annex A, Petition)
covering various properties described in the Lease Schedules attached to the Lease Agreement.
As security for the payment of respondent Richmann's obligations under the Lease Agreement,
respondent Ricardo B. Pajarillaga and Ella P. Pajarillaga (respondent spouses) executed a
Continuing Guaranty dated April 30, 1974 (Annex B, Petition). On May 20, 1976, respondent
Richmann also applied for and was granted credit financing facilities by petitioner in the amount of
P977,034.88, payable in 24 equal monthly installments commencing on June 20, 1976 and every
month thereafter until fully paid, as evidenced by the Non-Negotiable Promissory Note (Annex C,
Petition) executed by said respondent. The payment of respondent Richmann's obligation under
said Promissory Note is secured by a Continuing Guaranty dated July 31, 1974 (Annex D,
Petition) executed by respondent spouses. Private respondents defaulted in their respective
obligations under the Lease Agreement, non-negotiable Promissory Note and the two (2) Deeds of
Continuing Guaranty aforementioned.
ISSUE: Whether or not the remedy of the aggrieved party is to ask for the reformation, not
annulment.
HELD: In the present case, the transaction between the FNCB and Pajarillaga was not a true
financial leasing for the intention of the parties was not to enable Pajarillaga to acquire and use the
various heavy equipment and machinery (which already belonged to him or Richmann Tractors
Inc.) but to extend to him a loan to use as capital for his construction and logging businesses. As
correctly observed by the trial court and the Court of Appeals, the lease Page 172 of 178

agreements were simulated to disguise the true transaction between the parties, which was a loan
upon the security of Pajarillaga's various heavy equipment and machinery. Pajarillaga's action for
annulment of the simulated lease agreement was seasonably filed in 1979, within ten years from
the date of its execution in 1974 (Art. 1144, Civil Code). However, the trial court and the Court of
Appeals should have treated it as an action for reformation of contract. For, when the true intention
of the parties to a contract is not expressed in the instrument purporting to embody their
agreement by reason of mistake, fraud, inequitable conduct or accident the remedy of the
aggrieved party is to ask for the reformation, not annulment, of the instrument to the end that their
true agreement may be expressed therein (Arts. 1359 and 1362, Civil Code). If the true transaction
between FNCB and Pajarillaga or Richmann Tractors, Inc. –– a loan with chattel mortgage –– had
been reflected in the documents, instead of a simulated financial leasing, the creditor-mortgagee
(FNCB), upon the mortgagors' default in paving the debt, would have been entitled to seize the
mortgage and equipment from Pajarillaga or Richmann Tractors for the purpose of foreclosing the
chattel mortgage thereon. The mortgagors would have had no cause of action for actual, moral
and exemplary damages arising from the replevin of their mortgaged machinery and equipment by
the creditor, FNCB.
GARCIA v BISAYA 97 Phil 609, September 28, 1955
FACTS: On May 20, 1952, Garcia filed a complaint against Bisaya alleging that on November
12, 1938, the latter executed a deed of sale; that the parcel of land in the deed was an
unregistered land, but in fact it is registered to a certain Sandoval – that despite demand by
Garcia, Bisaya refused to correct such error. Garcia prayed for judgment ordering Bisaya to
make the correction and reform the deed of sale. Garcia denied executing the deed of sale and
pleaded prescription as a defense (10 years for written contracts). Lower court dismissed the
case on the ground that Garcia’s action had already prescribed. Garcia appealed that the case
should not be dismissed on the ground of prescription since he discovered the error in the deed of
sale only recently.
ISSUE: WON the case should be dismissed on the ground of prescription
HELD: No. Garcia could not have instituted his action to correct an error in the deed until that
error was discovered. It was not proven that the error was discovered more than ten years before
the action was

filed. Hence, it should not be dismissed due to prescription. BUT, it should be dismissed for lack of
cause of action of the complaint. It failed to allege that the deed does not express the real
agreement of the parties. Such allegation is essential since the objective in an action for
reformation is to make an instrument conform to the real agreement or intention of the parties.
Courts do not reform instruments for the sake of it, but to enable some party to assert rights under
the reform. If reformation will be applied by stating that the land is already covered by a TCT under
Sandoval, what right will Garcia be able to assert as a vendee? He would be in the position of
knowingly purchased a property not belonging to Bisaya, the vendor. Perhaps Garcia’s real
grievance is that Bisaya misled him that the land was unregistered. If that’s the case, the proper
remedy is not reformation but annulment of the contract (Art. 1359, par. 2) SC affirmed lower
court’s dismissal but for lack of cause of action of the complaint.

DOCTRINE: Art. 1359, par. 2: If mistake, fraud, inequitable conduct, or accident has prevented a
meeting of the minds of the parties, the proper remedy is not reformation of the instrument but
annulment of the contract.
Atilano vs. Atilano G.R. No. L-22487 May 21, 1969
FACTS
In 1916, Eulogio Atilano I acquired, by purchase from one Gerardo Villanueva, lot No. 535 of the
then municipality of Zamboanga. The vendee then obtained transfer certificate of title No. 1134 in
his name. In 1920, he had the land subdivided into five parts, identified as lots Nos. 535-A, 535-B,
535-C, 535-D and 535-E, respectively. On May 18 of the same year, after the subdivision had
been effected, Eulogio Atilano I, for the sum of P150.00, executed a deed of sale covering lot No.
535-E in favor of his brother Eulogio Atilano II, who then obtained transfer certificate of title No.
3129 in his name. Three other portions, namely, lots Nos. 535-B, 535-C, and 535-D, were likewise
sold to other persons. Atilano I retained for himself the remaining portions of the land, presumably
covered by the title to lot No. 535-A. upon his death, the title to this lot passed to Ladislao, in
whose name the corresponding certificate was issued. On 1959, Atilano II and his children had the
land resurveyed so that it could be properly subdivided. However, they discovered that the land
they were actually occupying on the strength of the deed of sale was lot No. 353-A and not lot
535-E, while the land which remained in the possession of Atilano I, and which was passed to
Ladislao was lot No. 353-E and not lot No. 535-A. On 1960, the heirs of Atilano II alleging, inter
alia, that they offered to surrender to the possession of lot No. 535-A and demanded in return the
possession of lot No. 535-E, but the defendants refused to accept the exchange. The plaintiffs'
insistence is quite understandable, since lot No. 535-E has an area of 2,612 square meters as
compared to the 1,808 square-meter area of lot No. 535-A. In their answer to the complaint, the
defendants alleged that the reference to lot No. 535-E in the deed of sale was an involuntary error;
that the intention of the parties to that sale was to convey the lot correctly identified as lot No. 535-
A. On the basis of the foregoing allegations the defendants interposed a counterclaim, praying that
the plaintiffs be ordered to execute in their favor the corresponding deed of transfer with respect to
Lot No. 535-E. The trial court rendered judgment in favor of the plaintiffs.

ISSUE 1. W/N the object of the deed of sale is lot No. 535-A and its designation as lot No. 535-E
was a simple mistake RATIO DECIDENDI Issue
Ratio
University of the Philippines College of Law Block F2021 W/N the object of the deed of sale is lot
No. 535-A and its designation as lot No. 535-E was a simple mistake
YES From the facts and circumstances, the object is lot No. 535-A and its designation as lot No.
535-E in the deed of sale was a simple mistake in the drafting of the document. The mistake did
not vitiate the consent of the parties, or affect the validity and binding effect of the contract
between them. The new Civil Code provides a remedy by means of reformation of the instrument.
This remedy is available when, there having been a meeting of the minds of the parties to a
contract, their true intention is not expressed in the instrument purporting to embody the
agreement by reason of mistake, fraud, inequitable conduct or accident In this case, the deed of
sale executed in 1920 need no longer be reformed. The parties have retained possession of their
respective properties conformably to the real intention of the parties to that sale, and all they
should do is to execute mutual deed of conveyance.

RULING WHEREFORE, the judgment appealed from is reversed. The plaintiffs are ordered to
execute a deed of conveyance of lot No. 535-E in favor of the defendants, and the latter in turn,
are ordered to execute a similar document, covering lot No. 595-A, in favor of the plaintiffs. Costs
against the latter. SO ORDERED. NO SEPARATE OPINION
FLORENCIA T. HUIBONHOA, petitioner, vs. COURT OF APPEALS, Spouses Rufina G. Lim and
ANTHONY LIM, LORETA GOJOCCO CHUA and Spouses SEVERINO and PRISCILLA
GOJOCCO, respondents.

Facts:

On June 8, 1983, Florencia T. Huibonhoa entered into a memorandum of agreement with

siblings Rufina Gojocco Lim, Severino Gojocco and Loreta Gojocco Chua stipulating that Florencia
T. Huibonhoa would lease from them (Gojoccos) three (3) adjacent commercial lots at Ilaya Street,
Binondo, Manila described as lot nos. 26-A, 26-B and 26-C, covered by Transfer Certificates of
Title Nos. 76098, 80728 and 155450, all in their (Gojoccos’) names.

On June 30, 1983, pursuant to the said memorandum of agreement, the parties inked a contract of
lease of the same three lots for a period of fifteen (15) years commencing on July 1, 1983 and
renewable upon agreement of the parties. Subject contract was to enable the lessee, Florencia T.
Huibonhoa, to construct a “four-storey reinforced concrete building with concrete roof deck,
according to plans and specifications approved by the City Engineer’s Office.” The parties agreed
that the lessee could let/sublease the building and/or its spaces to interested parties under such
terms and conditions as the lessee would determine and that all amounts collected as rents or
income from the property would belong exclusively to the lessee. The lessee undertook to
complete construction of the building “within eight (8) months from the date of the execution of the
contract of lease.

The parties also agreed that upon the termination of the lease, the ownership and title to the
building thus constructed on the said lots would automatically transfer to the lessor, even without
any implementing document therefor. Real estate taxes on the land would be borne by the lessor
while that on the building, by the lessee, but the latter was authorized to advance the money
needed to meet the lessors’ obligations such as the payment of real estate taxes on their lots. The
lessors would deduct from the monthly rental due all such advances made by the lessee.

During the construction of the building which later became known as Poulex Merchandise
Center,[4] former Senator Benigno Aquino, Jr. was assassinated. The incident must have affected
the country’s political and economic stability. The consequent hoarding of construction materials
and increase in interest rates allegedly affected adversely the construction of the building such
that Huibonhoa failed to complete the same within the stipulated eight-month period from July 1,
1983. Projected to be finished on February 29, 1984, the construction was completed only in
September 1984 or seven (7) months later.

Under the contract, Huibonhoa was supposed to start paying rental in March 1984 but she failed to
do so. Consequently, the Gojoccos made several verbal demands upon Huibonhoa for the
payment of rental arrearages and, for her to vacate the leased premises. On December 19, 1984,
lessors sent lessee a final letter of demand to pay the rental arrearages and to vacate the leased
premises. The former also notified the latter of their intention to terminate the contract of lease.
However, on January 3, 1985, Huibonhoa brought an action for reformation of contract before
Branch 148 of the Regional Trial Court in Makati. Docketed as Civil Case No. 9402, the Complaint
alleged that although there was a meeting of the minds between the parties on the lease contract,
their true intention as to when the monthly rental would accrue was not therein expressed due to
mistake or accident.

Issue: Whether or not contract must be reformed

Held:
No. Reformation is that remedy in equity by means of which a written instrument is made or
construed so as to express or conform to the real intention of the parties.

Article 1359 of the Civil Code provides that “(w)hen, there having been a meeting of the minds of
the parties to a contract, their true intention is not expressed in the instrument purporting to
embody the agreement, by reason of mistake, fraud, inequitable conduct or accident, one of the
parties may ask for the reformation of the instrument to the end that such intention may be
expressed. xxx.” An action for reformation of instrument under this provision of law may prosper
only upon the concurrence of the following requisites: (1) there must have been a meeting of the
minds of the parties to the contact; (2) the instrument does not express the true intention of the
parties; and (3) the failure of the instrument to express the true intention of the parties is due to
mistake, fraud, inequitable conduct or accident.

The meeting of the minds between Huibonhoa, on the one hand, and the Gojoccos, on the other,
is manifest in the written lease contract duly executed by them. The success of the action for
reformation of the contract of lease at bar should therefore, depend on the presence of the two
other requisites aforementioned.

Such contention betrays Huibonhoa’s confusion on the distinction between interpretation and
reformation of contracts. In National Irrigation Administration v. Gamit,[34] the Court distinguished
the two concepts as follows:
“‘Interpretation’ is the act of making intelligible what was before not understood, ambiguous, or not
obvious. It is a method by which the meaning of language is ascertained. The ‘interpretation’ of a
contract is the determination of the meaning attached to the words written or spoken which make
the contract. On the other hand, ‘reformation’ is that remedy in equity by means of which a written
instrument is made or construed so as to express or conform to the real intention of the parties. In
granting reformation, therefore, equity is not really making a new contract for the parties, but is
confirming and perpetuating the real contract between the parties which, under the technical rules
of law, could not be enforced but for such reformation. As aptly observed by the Code
Commission, the rationale of the doctrine is that it would be unjust and inequitable to allow the
enforcement of a written instrument which does not reflect or disclose the real meeting of the
minds of the parties.”
By bringing an action for the reformation of subject lease contract, Huibonhoa chose to reform the
instrument and not the contract itself.[35] She is thus precluded from inserting stipulations that are
not extant in the lease contract itself lest the very agreement embodied in the instrument is
altered.
G.R. No. 78050 October 23, 1989

CAESAR U. SOMOSO and ANITA B. SOMOSO, petitioners,

vs.
COURT OF APPEALS and CONPINCO MARKETING CO., respondents.

Ruben V. Abarquez for petitioners.

A B C Law Offices for private respondent.

PARAS, J.:

This is a petition for review on certiorari of the decision of the Court of Appeals** in CA-G.R. No. L-
09119 promulgated on March 2, 1987, affirming the order of the Regional Trial Court, Branch III,
Nabunturan, Davao, the dispositive portion of which reads:

WHEREFORE the order of the respondent court dismissing the petition for relief from judgment is
hereby AFFIRMED for lack of merit.

Appeal is DISMISSED with costs against appellant.

The facts of the case are as follows:

The spouses Caesar and Anita Somoso, petitioners herein, purchased from the Conpinco
Marketing Company, private respondent herein, one unit National VHS with complete accessories
and one unit Cinema Vision with complete accessories (PANASONIC Color Projecting System) as
evidenced by Exhibits "1" and "2" which are documents of sale with reservation of title duly signed
by the spouses (Record, p. 61-62). In connection with the purchase of the two (2) units the
spouses made a deposit of P10,000. 00 before the delivery of the units for which provisional
receipt No. 39671 was issued by Conpinco Marketing Co., "Exhibit 3" Record p. 63). The two units
bought by the spouses, one National VHS with complete accessories worth P23,558.00 and one
National Cinema Vision with complete standard accessories worth P124,449.00, were actually
delivered to the spouses on August 13, 1979, the delivery acknowledged by Mrs. Anita B. Somoso
as shown by Exhibits "4" and "5" (Rollo, p. 64-65). One day following the delivery of the two units
the spouses made an additional down payment of P5,000.00 for the cinema vision, as shown by
Exhibit "6" (Record, p. 66) and another additional down payment of P11,961.00 totalling
P26,961.00 for the cinema vision on August 17, 1979, as evidenced by Exhibit "7" (Record, p. 67).
On August 27,1979 they made a down payment of P7,118 for the VHS, Exhibit "8" (Record, p. 68).
No further payments were made by the spouses.
On October 24, 1979 Sony Video screen Model KV-500 bearing Serial No. 012619 with 110 watts
transformer and a Sony Betamax 3L 800 bearing Serial No. 93687, complete with manual blank
tape and remote control were delivered by private respondents to the house of petitioners for
demonstration only as requested by petitioner herein, Caesar Somoso in a letter dated August 27,
1979, Exhibit "A" (Record, p. 129) which units were pulled out the following day, Exhibits "10" and
"11" (Records, p. 70 and 71).

On November 27, 1979 petitioner herein, Caesar Somoso, wrote the Conpinco Marketing
Company demanding that the Company pull out the National VHS delivered inasmuch as it was
"not the unit requested for demonstration" and that it return the P15,000.00 deposit for the unit.
Petitioner threatened to consign the unit with the Court of First Instance of Tagum, Davao if not
pulled out within ten days from respondent's receipt of the letter, Exhibit "13" (Record, p. 130). In
response Conpinco Marketing Company sent petitioners a collection letter dated December 13,
1973 (Record, p. 74) and two statements of account, one for the Cinema Vision and another for
the National VHS Exhibits "4" (Record, p. 69).

On February 7, 1980, the Somoso spouses, petitioners herein, filed with the Court of First Instance
of Tagum, Davao, Branch 111 a complaint in consignation against the Conpinco Marketing
Company, respondent herein (Record, p. 1).
On November 26, 1985 the petitioners herein filed with the lower Court a motion for
reconsideration of the lower court's aforesaid order dated November 13, 1985. (Record, p. 246)
and on November 28, 1985 filed an omnibus motion praying that: (1) the Writ of execution be
quashed; (2) the motion for reconsideration be heard and (3) the plaintiffs be allowed to present
therein evidence in support of their contention that deliberate fraud was practiced on them by the
former counsel thereby preventing them from taking an appeal (Record, p. 252). Said motion was
opposed by Conpinco Marketing Company (Ibid. p. 257) and was set for hearing on December
6,1985 (Ibid. p. 255). Meanwhile the Somoso spouses also filed with the lower Court on December
4,1985, an urgent ex parte motion for the issuance of a temporary restraining order to restrain the
sheriff from executing the writ of execution pending the resolution of the aforesaid motions
(Record, p. 261). The same was granted by the Court a quo on the same date (Record, p. 263).
On January 15, 1986 petitioners herein filed with the lower court a motion to suspend execution of
the judgment and to post a bond which was granted by the lower court on January 30,1986
(Record, p. 351).

The Court a quo granted the omnibus motion on January 31, 1986 (Record, p. 353) and in another
order also dated January 31, 1986, the lower court allowed the adoption of the omnibus motion
and the motion for reconsideration as part of the petition for relief from judgment filed by the
plaintiffs, petitioners herein (Record, p. 354).

On February 4, 1986 Conpinco Marketing Company, filed a motion for reconsideration, (Record, p.
356) of the order of the lower court dated January 17, 1986 (Record, p. 324), granting plaintiffs'
motion to set aside the sheriffs notice of levy on two real properties of the Somoso spouses
(Record, p. 310). Said motion for reconsideration was denied by the lower court on February 5,
1986 (Record, p. 361). Said company's motion for reconsideration of the order of the lower court
dated January 31, 1986 (Record, p. 371) allowing the adoption of plaintiffs motion for
reconsideration and Omnibus Motion as part of the latter's petition for relief were likewise denied
by the lower court on February 21, 1989 (Record, p. 379).

The lower court resolved the Somoso spouses' motion for reconsideration on February 10, 1986,
denying therein plaintiff's petition for relief from judgment (Record, p. 363). From this order
received by plaintiff's petitioners herein, on February 13, 986 the Somosos filed their notice of
appeal on February 18, 1986, (
HELD:
The acts of petitioners before and after the delivery of the National VHS negate any claim that the
set was delivered for demonstration purposes only and that there was no meeting of the minds
between the parties as to the subject of the sale and its price. On August 13, 1979 before the
delivery of the two (2) units subject of the sale, petitioners Anita Somoso delivered to respondent
Conpinco Marketing Company SBTC Check No. 57333 in the amount of P10,000.00 as partial
down payment for the Cinema Vision, per Provisional Receipt No. 39691 (Record, p. 63). Upon
receipt of the partial down payment respondent Conpinco Marketing Company delivered the two
units. On August 14, 1979 petitioner Anita Somoso issued SBTC Check No. 57338 for P5,000.00
as additional down payment for Cinema visions, per provisional Receipt No. 39643 (Record, p. 66)
and then on August 17, 1979, petitioner made an additional down payment of P11,961 completing
the required down payment for National Visions of P26,981 for which Official Receipt No. 65447
was issued by respondent Conpinco Marketing Company (Records, p. 67). On August 27, 1979
SBTC Check No. 57332 in the amount of P7,118.00 was issued by petitioners as deposit for the
National VHS Unit per Official Receipt No. 65734.
Borromeo v. Court of Appeals, G.R. No. L-31342, L-31740, April 7, 1976
FACTS: Controversy is on the true nature of three documents which apparently are deeds of
absolute sale of realty by deceased Rallos on various dates in favor of Emmanuel Aznar.
Borromeo, administrator of estate of Rallos prayed for reformation alleging these were equitable
mortgages for loans granted to Rallos by Matias Aznar, deceased father of Emmanuel. Trial court
dismissed. CA affirmed (original decision) but later reversed (per curiam decision). CA admitted
evidence it previously rejected and held that the notations and memoranda of Crispina Rallos
Alcantara, although previously considered self-serving, may be considered as res gestae to show
nature of the contracts. Further, the Aznars “retained part of the price” stipulated in the deed and
there was unusual inadequacy in the price, justifying presumption of equitable mortgage in A1602,
Civil Code.

ISSUE: Whether or not CA error in admitting (as res gestae) the notes and memo it originally held
to be incompetent (issue of Aznar appeal)

HELD: The notes and memoranda cannot be considered as res gestae. Crispina was not a party
to the transaction. That she allegedly took notes made her at best only a witness, not a party. It
cannot be said that her taking of notes, absent any showing she was requested to do so or that
the parties knew what she was doing, constitute part of the transaction, the res gestae itself. If
such taking of notes has to be given any legal significance at all, at most it is only circumstantial
evidence.

However, the admission of said notes and memoranda suffers a fatal defect. No witness other
than Crispina has testified as to the veracity of her testimony. Also, Crispina is interested in the
outcome of this case. Her testimony cannot be considered as absolutely unbiased or impartial,
hence unreliable and insufficient to justify reformation. Such being the case, how can the notes
and memoranda in dispute and any weight to her testimony, when she herself created them? They
cannot have any more credibility than her own declarations given under oath in open court.
Riviera Filipina v. CA DOCTRINE: A right of first refusal means identity of terms and
conditions to be offered to the lessee and all other prospective buyers, and a contract of
sale entered into in violation of a right of first refusal of another person, while valid, is rescissible.

FACTS: On November 23, 1982, respondent Juan L. Reyes executed a Contract of

Lease with Right of First Refusal with Riviera Filipina, Inc. involving a parcel of land located
along EDSA, Quezon City. Subsequently, the said land was extrajudicially foreclosed by
Prudential Bank. To redeem the subject property, Reyes offered to sell the subject
property to Riviera, but there was a disagreement as to the price. On December 4, 1988,
Reyes offered the subject property to Cypress. The following day, Cypress bargained for
P5,300.00 per square meter. Reyes accepted the same. However, since Cypress did not have
the amount at that moment, Reyes told him to look for a partner for that purpose. In
January 1989, Reyes decided to approach anew Riviera but the latter insisted on his offer of
P5,000 only. In February 1989, Cypress and its partner, Cornhill Trading Corporation, were
able to come up with the amount sufficient to cover the redemption money, with which
Reyes paid to the Prudential Bank. Thereafter, Riviera claimed that its right of first refusal
under the lease contract was violated, thus, it filed a suit to compel Reyes, Cypress, Cornhill
and Urban Development Bank to transfer the disputed title of the land in its favor upon payment of
the price paid by Cypress and Cornhill. After trial, the court a quo dismissed the complaint
as well as the counterclaims and cross-claims. On appeal, the appellate court affirmed the
decision of the trial court in its entirety. Hence, this petition.
ISSUE: Whether petitioner can still exercise his right of first refusal.
RULING: No. The Court held that in order to have full compliance with the contractual
right granting petitioner the first option to purchase, the sale of the properties for the price
for which they were finally sold to a third person should have likewise been first offered to the
former. Further, there should be identity of terms and conditions to be offered to the buyer
holding a right of first refusal if such right is not to be rendered illusory. Lastly, the basis
of the right of first refusal must be the current offer to sell of the seller or offer to purchase
of any prospective buyer. Thus, the prevailing doctrine is that a

right of first refusal means identity of terms and conditions to be offered to the lessee
and all other prospective buyers and a contract of sale entered into in violation of a right of first
refusal of another person, while valid, is rescissible. An examination of the attendant
particulars of the case do not persuade the Court to uphold petitioner’s view. As clearly
shown by the records and transcripts of the case, the actions of the parties to the contract of
lease, Reyes and Riviera, shaped their understanding and interpretation of the lease
provision "right of first refusal" to mean simply that should the lessor Reyes decide to sell
the leased property during the term of the lease, such sale should first be offered to the lessee
Riviera. And that is what exactly ensued between Reyes and Riviera, a series of negotiations
on the price per square meter of the subject property with neither party, especially
Riviera, unwilling to budge from his offer, as evidenced by the exchange of letters between the
two contenders.
G.R. No.114323 July 23,1998 Oil and Natural Gas Commission vs CA Basis of Judgement
Facts: Petitioner is a foreign corporation owned and controlled by the government of Indi. While
the respondent is a private corporation duly organized and existing under Philippine law. Both
parties entered into a contract obligating Pacific Company to supply Oil and Natural Gas with
$,300 metric tons of oil well cement. Pacific failed to deliver the cargo to Oil and Natural Gas
Commission after he received payment and several demands Oil and Natural Gas won in the
Arbitral case him US $899,603.77 Pacific refuse to pay the amount adjudged by the foreign
court Oil and Natural Gas then filed a complaint with the RTC of Surigao City. The private
respondent moved to dismiss the complaint on the following grounds: o plaintiffs lack of legal
capacity to sue; o lack of cause of action; and o plaintiffs claim or demand has been waived,
abandoned, or otherwise extinguished. RTC ruled in favor of Pacific for jurisdiction over the
case CA affirmed the RTC/s decision saying that the foreign court could not validly adopt the
arbitrator’s award
Issue: Whether or not the arbitrator has jurisdiction over the dispute between the petitioner and the
private respondent under Clause 16 under the contract.
Held: No Ratio: The constitutional mandate that no decision shall be rendered by any court without
expressing therein dearly and distinctly the facts and the law on which it is based does not
preclude the validity of "memorandum decisions" which adopt by reference the findings of fact and
conclusions of law contained in the decisions of inferior tribunals. In Francisco v. Permskul, this
Court held that the following memorandum decision of the Regional Trial Court of Makati did not
transgress the requirements of Section 14, Article VIII of the Constitution.
Lim Yhi Luya vs. CA, G.R. No. L-40258
FACTS:Since 1958, Lim Yhi Luya (Lim) and Hind Sugar Company (Hind) have had
businessdealings, with Lim selling sugar to Hind and Hind supplying the company with
diesoline,gasoline, muriatic acid, sulfuric acid, and other supplies and materials ordered on credit.
OnNovember 12, 1970, Lim received a telegram from Hind that said, "Please come
tomorrowmorning without fail." The next day, Lim went to Hind, who offered to sell sugar for
P37.00per picul. The parties agreed to buy 4,085 piculs of sugar for P35.00 per
picul. Hindprepared the contract of sale, and one of the specific terms of the contract states that
theterm of payment is cash upon signing of the contract. On the same day, and in accordancewith
the contract, Lim received four delivery orders totaling 4,085 piculs of sugar sold.Between
November 13, 1970 and January 27, 1971, Hind withdrew a total of 3,735 piculsfrom the
company warehouse in varying quantities, leaving a balance of 350
piculsundeliverable.The issue of payment arose between the parties on January 22, 1971. Lim
claimed thathe paid P142,975.00 to company officials on November 13, 1970, and as
proof of hispayment, he referred to the contract's stipulation, which stated "Terms: Cash upon
signing ofthis contract." Hind denied Lim's claim, claiming that the latter never paid for the sugar
onNovember 13, 1970, or at any time thereafter. Lim was not paid, according to an audit reportor
an examination of the company's books.B.
ISSUE/S: Whether Lim has paid the sum of P142,975.00 which is the purchase price of the
4,085piculs of sugar covered by the contract of sale between the parties?
C. SUPREME COURT DECISION ON THE ISSUE/S CITED:The decision of the trial court is
hereby (1) On the first cause of action, ordering therespondent to immediately deliver to
petitioner the 350 piculs of H-2 sugar or to paypetitioner the sum of P12,250.00 plus
legal rate of interest from November 13, 1970, untilfully paid, giving unto the petitioner the option
to choose whether to receive the sugar or toreceive the payment corresponding to the
same; (2) On the second cause of action,ordering the respondent to deliver immediately
to the petitioner the 1,000 piculs of exportsugar or to pay the petitioner the sum of P55,000 00 with
legal rate of interest from January20, 1971, but giving the option or choice to the petitioner; (3)
With respect to the third causeof action, ordering the respondent to deliver to the petitioner the 160
piculs of H-3 sugar orto pay to petitioner the sum of P6,400,00 with legal rate of interest from June
3, 1970, butthe option again belonging to the petitioner; (4) On the fourth cause of action, ordering
therespondent to pay to the petitioner the sum of P60,592.30 with interest at 12% per annumfrom
the filing of the complaint and to pay attorney’s fees of 25% of the principal obligation,that is, the
sum of P15,148.08; (5) On the fifth and sixth causes of action, ordering therespondent to pay to
the petitioner the sum of P25,000 00 as damages and to pay anothersum of P15,000 00 as
attorney’s fees, the said fees referring to the first, second and thirdcauses of action.