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#1 ROMAN CATHOLIC CHURCH vs. REGINO PANTE
FACTS:
Herein petitioner, the Roman Catholic Church, represented by
Archbishop of Caceres, sold a 32sqm lot in Canaman,
Camarines Sur to herein respondent, Regino Pante. An initial
DP of P1.2K was paid, and the remaining balance payable in 3
years.
Soon after, the Church sold a 215sqm lot which included the
32sqm lot previously sold to Pante.
Respondent then instituted an action to annul the sale
between the Church and the spouses Nestor and Fidela Rubi
as no settlement could reached for the concrete fence erected
by the spouses over the lot which blocked Pante and his
family's access from their home to the municipal road.
In its counter-claim, the Church stated its policy to sell its lots
only to actual occupants. Thus, petitioner seeks to annul its
contract with Pante as the latter misrepresented that he had
been an actual occupant of the 32sqm lot, when in fact, it was
only used as a passageway from respondent's house to town
proper.
Furthermore, it claims that spouses Rubi were the rightful
buyers for occupying the 215sqm meter lot as
RTC ruled in favor of the Church based on the latter's policy to
sell its lots only to the occupants. Since, the Church's consent
was secured through its mistaken belief that Pante was a
qualified "occupant," RTC annulled the contract between the
Church and Pante, pursuant to Art. 1390 of the Civil Code.
It upheld the sale in favor of Sps. Rubi due to Pante’s three-
year delay in payment and admission that subject lot has long
been occupied by Sps. Rubi’s predecessors.
Pante appealed to CA which granted the same and reversed
RTC’s Decision.
Hence, this petition for review on certiorari.
ISSUE: WHETHER OR NOT CHURCH’S CONSENT WAS VITIATED
AS PANTE MISREPRESENTED HIMSELF AS OCCUPANT OF THE
SUBJECT PROPERTY?
RULING: No. The Court has held that no misrepresentation
existed vitiating the Church’s consent and invalidating the
contract.
Article 1331. In order that mistake may invalidate consent, it
should refer to the substance of the thing which is the object
of the contract, or to those conditions which have principally
moved one or both parties to enter into the contract.
Mistake as to the identity or qualifications of one of the
parties will vitiate consent only when such identity or
qualifications have been the principal cause of the contract.
A simple mistake of account shall give rise to its correction.
For mistake as to the qualification of one of the parties to
vitiate consent, two requisites must concur:
1. the mistake must be either with regard to the identity or
with regard to the qualification of one of the contracting
parties; and
2. the identity or qualification must have been the principal
consideration for the celebration of the contract.
Contrary to Church’s claim that being an occupant or resident
is a qualification, it does not appear to be necessary. If it is the
policy, neither Pante nor Sps. Rubi would qualify to do so as
the 32sqm lot cannot be mistaken as anyone’s residence.
Furthermore, it has been ruled by the court that is unlikely
that Pante could misrepresent himself as lot’s occupant as the
32sqm lot was clearly labeled as “RIGHT OF WAY.” This was
noted on the sketch plan from the Archbishop’s Palace.
Moreover, the then Parish Priest of Canaman, Fr. Marcaida,
allowed the sale, which was also approved by Archdiocese’s
Oeconomous.
In view of the foregoing, it is established that there was no
deliberate, willful or fraudulent act committed by Pante that
misled the Church to give consent to the sale.
As a matter of fact, it was the Church who acted in bad faith
as he still sold the subject lot to Sps. Rubi when it has not yet
secured a court ruling that its contract with Pante is invalid.
WHEREFORE, we DENY the petition for review on certiorari,
and AFFIRM the decision of the Court of Appeals dated May
18, 2006, and its resolution dated August 11, 2006, issued in
CA-G.R.-CV No. 65069. Costs against the Roman Catholic
Church.
SO ORDERED.
#2 SPS. GENOTIVA vs. EQUITABLE-PCI BANK (now BDO)
FACTS: Goldland Equity, Inc., wherein petitioner Calvin
Genotiva is one of the stockholders, was granted a P2M loan
by BDO as evidenced by a Promissory Note.
Meanwhile, Calvin's wife, Violet, was an employee of BDO
Cagayan De Oro.
The Sps. Genotiva filed a Complaint for Declaration of Nullity
of Contract, Reconveyance and Damages with Prayer for a
Writ of Preliminary Injunction and/or TRO against BDO as the
latter allegedly refused to release the following unless they
execute a Real Estate Mortgage over subject property to
secure a loan of Goldland:
a) Violet Genotiva's retirement benefits and
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b) owner's copy of TCT which was used for a housing loan
already fully paid.
As they had no choice, they acceded to the demands and
signed the Real Estate Mortgage.
Furthermore, the Genotivas offered to pay P500k to BDO to
redeem the collateral. However, it was applied as payment of
interest on Goldland's loan. Lastly, the subject property was
foreclosed and scheduled for auction sale.
BDO, in their Answer, alleged that Violet's clearance was
withheld due to a Deed of Suretyship, previously executed by
the Genotivas and other stockholders of Goldland for the
P2M loan.
RTC rendered judgment in favor of the Genotivas and ruled
that under BDO’s undue influence, the petitioner spouses
executed REM. Thus, subject contract (REM) was voidable.
Moreover, trial court ordered BDO to return the P500K as it
was invalidly applied to the interest on Goldland’s loan.
A Motion for Writ of Execution Pending Appeal was filed by
the Genotivas.
BDO then filed an Urgent Motion to Stay Discretionary
Execution by Posting Superdeas Bond. However, it was
denied. They then elevated the case to CA.
CA granted BDO’s appeal and set aside RTC’s decision. It held
that the bank as creditor had right to proceed against the Sps.
Genotiva as sureties under Art. 1216 of the NCC. Therefore,
BDO had the right to withhold Violet’s retirement benefits as
one of Goldland’s sureties, apply it to Goldland’s due interest,
and foreclose the subject property due to Goldland’s
nonpayment of its obligation to the bank.
Furthermore, CA ruled that RTC erred in finding mortgage
violable because Sps. Genotiva’s consent was vitiated by
undue influence.
Petitioner spouses moved for reconsideration but was denied.
Hence, this Petition for Review.
ISSUES:
1) Whether or not subject contract is valid despite Sps.
Genotiva’s claim of vitiated consent?
2) Whether or not BDO had the right to retain the P500l
under the Deed of Suretyship?
RULING: Yes. The Court has held that the contract or the Real
Estate Mortgage is valid.
For intimidation to vitiate consent, the ff requisites must be
present:
(1) that the intimidation must be the determining cause of the
contract, or must have caused the consent to begiven;
(2) that the threatened act be unjust or unlawful;
(3) that the threat 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; and
(4) that it produces 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.
In view of the foregoing, BDO’s “threat” of withholding
Violet’s retirement benefits is not what the law refers to as
intimidation.
Moreover, it was the Sps. Genotiva who WILLINGLY OFFERED
to execute REM in exchange of the release of Violet’s
retirement benefits.
Contrary to Genotiva’s claim and RTC’s decision, there is no
undue influence from BDO.
There is undue influence "when a person takes improper
advantage of his power over the will of another, depriving the
latter of a reasonable freedom of choice.”
For undue influence to be present, the influence exerted must
have so overpowered or subjugated the mind of a contracting
party as to destroy their free agency, making [them] express
the will ofanother rather than [their] own."
In the case at bar, there was neither influence exerted by BDO
on the Sps. Genotiva nor deprivation of free agency when
petitioner spouses signed the subject contract.
Being forced into a situated situation does not constitute
vitiated consent.
In fact, the Court has held that the spouses may still resort to
other means, such as filing a judicial action against BDO and
yet, they did not. The Genotivas willingly offered to mortgage
their property to BDO in exchange for the release of Violet’s
retirement benefits.
On the issue of novation of Deed of Suretyship, it was raised
for the first time. Thus, the Court may not address the issue
so as not to offend the rules of fair play, justice and due
process.
On the issue of BDO’s application of P500k to Goldland’s loan,
the Court has held that respondent bank does not have the
right to retain the money and apply it to Goldland’s due
interest.
While a creditor has a right to proceed against the surety, the
law does not give him the right to deprive said surety without
due process. Thus, it would have been right if BDO rejected
the P500k or asked the spouses whether or not it will be
applied to Goldland’s payment of interest.
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Furthermore, BDO as creditor should have just instituted a
proceeding for collection or enforcement of the contract
should the Sps. Genotiva declined to apply it on Goldland’s
loan. While he has the right to collect from the petitioner
spouses, it should be done so through lawful means.
WHEREFORE, the Petition is hereby PARTLY GRANTED. The
March 28, 2014 Decision of the Court of Appeals inCA-G.R. CV
NO. 02724-MIN and CA-G.R. SP NO. 04424-MIN is SET ASIDE
and a new one entered ordering EQUITABLE-PCI BANK (now
BANCO DE ORO UNIBANK, INC.) to pay the following amounts
to SPOUSES CALVIN LUTHER and VIOLET GENOTIVA:
(1) Five Hundred Thousand Pesos (P500,000.00), with interest
of twelve percent (12%) per annum, computed from the filing
of the Complaint on February 18, 2003 to June 30, 2013, and
six percent (6%)
per annum from July 1, 2013 until full payment;
(2) moral damages in the amount of Fifty Thousand Pesos
(P50,000.00); and
(3) attorney’s fees in the amount of Fifty Thousand Pesos
(P50,000.00).
SO ORDERED.
#3 LOYOLA vs. CA, CHILDREN OF MARIANO ZARRAGA, and
HEIRS OF JOSE ZARRAGA
FACTS: Subject property in this case, a parcel of land (Lot 115-
A-1) was originally owned by siblings, Mariano and Gaudencia
Zarraga.
Petitioners in this case are the children of Victorina Zarraga
vda. Loyola, sister of Mariano and Gaudencia.
Meanwhile, private respondents here except those heirs of
Jose Zarraga are the children of Mariano, and the heirs of Jose
Zarraga.
Gaudencia allegedly sold to private respondents her share in
Lot 115-A-1 for P34K, evidenced by a notarized document
“Bilihang Tuluyan ng Kalahati (1/2) ng Isang Lagay ng Lupa.”
Victorina, together with her sister Cecilia, filed a complaint
before RTC Biñan, Laguna, to annul the sale and TCT.
Trial court rendered judgment in favor of the petitioners.
However, CA reversed RTC’s decision. A Motion for
Reconsideration was filed but was denied.
Hence, this petition for review on certiorari.
ISSUE: WHETHER OR NOT THE DEED OF ABSOLUTE SALE IS
VALID?
RULING: Yes, the Court has held that DOAS is valid even
though petitioners contend that DOAS is invalid as it was
simulated.
Simulation is "the declaration of a fictitious will, deliberately
made by agreement of the parties, in order to produce, for
the purposes of deception, the appearances of a juridical act
which does not exist or is different what that which was really
executed."
Requisites are:
(a) an outward declaration of will different from the will of the
parties;
(b) the false appearance must have been intended by mutual
agreement; and
(c) the purpose is to deceive third persons.
In the case at bar, none of these are present in the assailed
transaction.
Furthermore, fraud is never presumed, but must be both
alleged and proved.
It cannot be said that Romana exercised undue influence to
obtain Gaudencia’s consent to sale as the latter was weak and
dependent on the former for her daily needs.
Undue influence depends upon the circumstances of each
case and not on bare academic rules.
Three elements must be present for undue influence to be
established to justify the cancellation of an instrument:
(a) a person who can be influenced;
(b) the fact that improper influence was exerted;
(c) submission to the overwhelming effect of such unlawful
conduct.
Though they claim that Gaudencia was old and senile, and
therefore, incapable of independent and clear judgment; the
Court has held that a person is not incapacitated to contract
just because of advanced years and physical infirmities.
Undue influence is not to be inferred from age, sickness, or
debility of body, if sufficient intelligence remains.
Moreover, no proof was shown that Gaudencia lost her
mental faculties of the sale. Petitioners did not even rebut
notary public’s testimony that Gaudencia is still alert and
sharp.
Thus, Gaudencia’s consent to sale is valid. Therefore, DOAS is
also valid.
WHEREFORE, the petition is DENIED, and the assailed decision
of the Court of Appeals AFFIRMED. Costs against petitioners.
SO ORDERED.
#4 SPS. CARMEN TONGSON AND JOSE TONGSON
(substituted by his children) vs. EMERGENCY PAWNSHOP
BULA, INC. and DANILO NAPALA
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FACTS: Sps. Tongson executed with Napala an Memorandum
of Agreement as they find the latter’s offer to purchase their
364sqm of land for P3M acceptable.
A DOAS was prepared indication consideration of P400K.
When Carmen complained about this, Napala said not to
worry as he will be the one to pay for the taxes and the net
amount of P3M will be received by the former.
Another MOA was executed showing that land’s selling price
is P400K, which replaced the previous MOA.
P200k in cash was paid to Sps. Tongson and PDC with the
amount of P2.8M was issued upon signing of the DOAS.
However, the check was dishonored as it was “Drawn Against
for Insufficient Funds.”
Despite repeated demands, Napala failed to pay in full or
return the land.
A Complaint for Annulment of Contract and Damages with a
Prayer for the Issuance of a TRO and a Writ of Preliminary
Injunction was filed before RTC Davao City against Napala.
Napala said that the complaint is baseless as the Sps. Tongson
never returned the check as it was misplaced.
RTC rendered decision in favor of Sps. Tongson. It ruled that
the Sps. Tongson were induced to enter contract of sale due
to Napala’s assurance that the check would not bounce.
However, it did. Thus, annulment of contract of sale is
justified under Art. 1338 of the NCC as there was fraud.
EPBI and Napala appealed to CA.
CA agreed with trial court’s decision. However, it disagreed
that fraud employed by Napala may be a basis for annulment
of contract of sale. Nonetheless, due to the fraud committed
by Napala, Sps. Tongson are entitled to the payment of
balance of P2.8M plus legal interest rate of 6% per annum.
Sps. Tongson filed a partial motion for reconsideration but
was denied.
Hence, this petition for review.
ISSUE: WHETHER OR NOT THE CONTRACT OF SALE CAN BE
ANNULED BASED ON THE FRAUD EMPLOYED BY NAPALA?
RULING: No, the Court has held that there is no causal fraud
to justify the annulment of sale between the parties.
A contract is a meeting of the minds between two persons,
whereby one is bound to give something or to render some
service to the other.
A valid contract requires the concurrence of the following
essential elements:
(1) consent or meeting of the minds, that is, consent to
transfer ownership in exchange for the price;
(2) determinate subject matter; and
(3) price certain in money or its equivalent.
In the case at bar, all essential elements are present.
Though the Sps. Tongson claim that their consent was vitiated
by fraud, the Court ruled that it was not as the parties already
consented and agreed to the sale transaction prior to the
issuance of the check.
Under Art. 1338 of the NCC, there 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 order that
fraud may vitiate consent, it must be the causal (dolo
causante), not merely the incidental (dolo incidente),
inducement to the making of the contract.
Additionally, the fraud must be serious.
As the Court ruled that no causal fraud attended the
execution of the sales contract, there is still fraud committed
by Napala as he assured the Tongsons that the check is
sufficiently funded at its maturity.
Contracts undergo three stages – negotiation, perfection and
consummation. The first two stages properly took place.
However, consummation never happened as even though the
Tongsons as seller performed their obligation of executing
DOAS, Napala failed to fully pay his obligation to the
petitioner spouses.
As there was a substantial breach of their reciprocal
obligation, the Sps. Tongson are entitled to rescission of the
sales contract under Art. 1191 of the NCC.
Rescission is proper and justified even though the Sps.
Tongson specifically prayed for annulment of the contract of
sale as it likewise prayed for “other reliefs which may be
deemed just equitable in the premises.” Considering the
substantial breach, EPBI and Napala must reconvey the
subject property and in turn, Sps. Tongson must refund the
initial payment of P200K.