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une 30, 2005, 462 scra 614
Meeting of the Minds in a Contract of Sale

This is a case involving family members. In April 1987, Ainza and her daughter Eugenia orally
agreed that Ainza pay P100k in exchange for half of the portion of Eugenia’s undivided
conjugal property (a lot located in QC). No Deed of Absolute Sale was executed. There was
physical delivery of the land through Concepcion’s other daughter (Natividad) acting as atty-
in-fact. Concepcion thereafter allowed Natividad and her husband occupy the purchased
portion of the land.
In 1994, Antonio caused the division of the lot into three (two were occupied by the spouses),
necessarily displacing Natividad. He also had each subdivision titled. Antonio requested
Natividad to vacate the premises. Antonio averred that his wife only admitted of selling 1/3 of
the property to Concepcion for which a receipt was issued signed by Concepcion. The RTC
ruled in favor of Concepcion. The CA reversed the RTC ruling. CA explained that the property
is conjugal hence the sale should have been with Antonio’s consent.
ISSUE: Whether or not the contract of sale between Ainza and Eugenia is valid.
HELD: Yes it is valid until annulled (voidable). There was a perfected contract of sale between
Eugenia and Concepcion. The records show that Eugenia offered to sell a portion of the
property to Concepcion, who accepted the offer and agreed to pay P100,000.00 as
consideration. The contract of sale was consummated when both parties fully complied with
their respective obligations. Eugenia delivered the property to Concepcion, who in turn, paid
Eugenia the price of P100,000.00, as evidenced by the receipt. Since the land was undivided
when it was sold, Concepcion is entitled to have half of it.
Antonio cannot, however, attack the validity of the sale b/n his wife and his mom-in-law, either
under the Family Code or the Old Civil Code due to prescription. The sale came to his
knowledge in 1987. He only filed the case in 1999. His right prescribed in 1993 (under the FC
[5 years]) and 1997 (under OCC [10 years]).
137686
FACTS: Several parcels of land were mortgaged by the respondents

during the lifetime of the respondent’s grandparents to the Rural bank of Milaor
as shown by the Deed of Real Estate Mortgage and the Promissory Note.
Spouses Felicisimo Ocfemia and Juanita Ocfemia, one of the respondents, were
not able to redeem the mortgaged properties consisting of seven parcels of land
and so the mortgage was foreclosed and thereafter ownership was transferred
to the petitioner bank. Out of the seven parcels of land that were foreclosed,
five of them are in the possession of the respondents because these five parcels
of land were sold by the petitioner bank to the respondents as evidenced by
a Deed of Sale. However, the five parcels of land cannot be transferred in the
name of the parents of Merife Nino, one of the respondents, because there is a
need to have the document of sale registered. The Register of deeds, however,
said that the document of sale cannot be registeredwithout the board resolution
of the petitioner bank confirming both theDeed of sale and the authority of
the bank manager, Fe S. Tena, to enter such transaction.
The petitioner bank refused her request for a board resolution and made
many alibis. Respondents initiated the present proceedings so that they could
transfer to their names the subject five parcel of land and subsequently
mortgage said lots and to use the loan proceeds for the medical expenses of
their ailing mother.
ISSUE: May the Board of Directors of a rural banking corporationbe

compelled to confirm a deed of absolute sale of real property owned by the
corporation which deed of sale was executed by the bank managerwithout prior
authority of the board of directors of the rural banking corporation?
HELD: YES. The bank acknowledges, by its own acts or failure to act, the
authority of Fe S. Tena to enter into binding contracts. After the execution of
the Deed of Sale, respondents occupied the properties indispute and paid the
real estate taxes. If the bank management believed that it had title to the
property, it should have taken measured to prevent the infringement and
invasion of title thereto and possession thereof. Likewise, Tena had previously
transacted business on behalf of the bank, and the latter had acknowledged her
authority. A bank is liable to innocent third persons where representation is
made in the course of its normal business by an agent like Manager Tena even
though such agent is abusing her authority. Clearly, persons dealing with her
could not be blamed for believing that she was authorized to transact business
for and on behalf of the bank.
The bank is estopped from questioning the authority of the bank to enter into
contract of sale. If a corporation knowingly permits one of its officers or any
other agent to act within the scope of an apparent authority, it holds the agent
out to the public as possessing the power to do those acts; thus, the
corporation will, as against anyone who has in good faith dealt with it through
such agent, be estopped from denying the agent’s authority.
Leonardo vs CA (2004)
[438 scra 201; G.R. No. 125485; September 13, 2004] Contracts|Civil Law|Vitiated Consent
RESTITUTA LEONARDO, assisted by JOSE T. RAMOS,
vs.
COURT OF APPEALS, et. al.
FACTS:
Petitioner Restituta Leonardo is the only legitimate child of the late Sps. Tomasina Paul and Balbino Leonardo.
Private respondents Teodoro, Victor, Corazon, Piedad, et. al, all surnamed Sebastian, are the illegitimate
children of Tomasina with Jose Sebastian after she separated from Balbino Leonardo.
In 1988, private respondent Corazon Sebastian with her niece and a certain Bitang, came to Restituta’s house
to persuade her to sign a deed of extrajudicial partition of the estate of Tomasina Paul and Jose Sebastian.
Before signing the document, Restituta allegedly insisted that they wait for her husband Jose Ramos so he
could translate the document which was written in English. Subsequently, she proceeded to sign the document
even without her husband and without reading the document, on the assurance of private respondent Corazon
that she will get her share as a legitimate daughter. Petitioner then asked private respondent Corazon and her
companions to wait for her husband so he could read the document. When petitioner’s husband arrived,
however, private respondent Corazon and her companions had left without leaving a copy of the document. It
was only when petitioner hired a lawyer that they were able to secure a copy and read the contents thereof.
Petitioner refuted private respondents’ claim that they were the legitimate children and sole heirs of Jose
Sebastian and Tomasina Paul since the latter were never married to each other, thus, the extrajudicial partition
was therefore unlawful and illegal. Petitioner also claimed that her consent was vitiated because she was
deceived into signing the extrajudicial settlement. She further denied having appeared before a Judge of MTC
of Urbiztondo, Pangasinan to acknowledge the execution of the extrajudicial partition.
ISSUE:
Whether the consent given by petitioner to the extrajudicial settlement of estate was given voluntarily.
HELD:
No. Contracts where consent is given by mistake or because of violence, intimidation, undue influence or fraud
are voidable. These circumstances are defects of the will, the existence of which impairs the freedom,
intelligence, spontaneity and voluntariness of the party in giving consent to the agreement. In determining
whether consent is vitiated, Courts are given a wide latitude in weighing the facts considering the age, physical
infirmity, intelligence, relationship and the conduct of the parties at the time of making the contract and
subsequent thereto, irrespective of whether the contract is in a public or private writing.
In this case, private respondents failed to offer any evidence to prove that the extrajudicial settlement of estate
was explained in a language known to the petitioner, i.e. the Pangasinan dialect. Clearly, petitioner, who only
finished Grade 3, was not in a position to give her free, voluntary and spontaneous consent without having the
document, which was in English, explained to her in the Pangasinan dialect.
[G.R. No. 182435; August 13, 2012] Obligation and Contracts| Rescission
LILIA B. ADA, et.al. Petitioners, vs. FLORANTE BAYLON, Respondent.
FACTS:
Rita Baylon, was alleged to have been used the income ofbthe estate produced by parcels of land co-owned by
petitioners. They claimed that Rita took possession of the said parcels of land and appropriated for herself the
income from the same hence, this prompted petitioners to file a Complaint for partition, accounting and
damages against the former. During the pendency of the case, Rita, through a Deed of Donation, donated a lot
in favor of Florante Baylon. Petitioners filed again a petition that the said donation be rescinded in accordance
with Article 1381(4) of the Civil Code.
ISSUE:
Whether the deed of donation to Florante Baylon is subject for rescission.
HELD:
The kinds of rescissible contracts, according to the reason for their susceptibility to rescission, are the
following:
1. those which are rescissible because of lesion or prejudice;

2. those which are rescissible on account of fraud or bad faith;
3. those which, by special provisions of law, are susceptible to rescission.
In the case at bar, the lower court aptly ordered the rescission of the donation in favor of Florante. It is
undisputed that, at the time they were gratuitously conveyed by Rita, the subject lot are among the properties
that were the subject of the partition case then pending with the RTC. Rita’s failure to inform and seek the
approval of the petitioners or the RTC regarding the conveyance gave the petitioners the right to have the said
donation rescinded pursuant to Article 1381(4) of the Civil Code.
Read full Article here.
Rescission is a remedy granted by law to the contracting parties and even to third persons, to
secure the reparation of damages caused to them by a contract, even if it should be valid, by
means of the restoration of things to their condition at the moment prior to the celebration of
said contract. It is a remedy to make ineffective a contract, validly entered into and therefore
obligatory under normal conditions, by reason of external causes resulting in a pecuniary
prejudice to one of the contracting parties or their creditors.
Contracts which are rescissible are valid contracts having all the essential requisites of a
contract, but by reason of injury or damage caused to either of the parties therein or to third
persons are considered defective and, thus, may be rescinded.

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une 30, 2005, 462 scra 614

Meeting of the Minds in a Contract of Sale

FACTS: Several parcels of land were mortgaged by the respondents

ISSUE: May the Board of Directors of a rural banking corporationbe

LILIA B. ADA, et.al. Petitioners, vs. FLORANTE BAYLON, Respondent.

Whether the deed of donation to Florante Baylon is subject for rescission.

1. those which are rescissible because of lesion or prejudice;

Read full Article here.

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