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#1 ROMAN CATHOLIC CHURCH vs. REGINO PANTE

A simple mistake of account shall give rise to its correction.
FACTS:
Herein petitioner, the Roman Catholic Church, represented by For mistake as to the qualification of one of the parties to
Archbishop of Caceres, sold a 32sqm lot in Canaman, vitiate consent, two requisites must concur:
Camarines Sur to herein respondent, Regino Pante. An initial 1. the mistake must be either with regard to the identity or
DP of P1.2K was paid, and the remaining balance payable in 3 with regard to the qualification of one of the contracting
years. parties; and
2. the identity or qualification must have been the principal
Soon after, the Church sold a 215sqm lot which included the consideration for the celebration of the contract.
32sqm lot previously sold to Pante.
Contrary to Church’s claim that being an occupant or resident
Respondent then instituted an action to annul the sale is a qualification, it does not appear to be necessary. If it is the
between the Church and the spouses Nestor and Fidela Rubi policy, neither Pante nor Sps. Rubi would qualify to do so as
as no settlement could reached for the concrete fence erected the 32sqm lot cannot be mistaken as anyone’s residence.
by the spouses over the lot which blocked Pante and his
family's access from their home to the municipal road. Furthermore, it has been ruled by the court that is unlikely
that Pante could misrepresent himself as lot’s occupant as the
In its counter-claim, the Church stated its policy to sell its lots 32sqm lot was clearly labeled as “RIGHT OF WAY.” This was
only to actual occupants. Thus, petitioner seeks to annul its noted on the sketch plan from the Archbishop’s Palace.
contract with Pante as the latter misrepresented that he had
been an actual occupant of the 32sqm lot, when in fact, it was Moreover, the then Parish Priest of Canaman, Fr. Marcaida,
only used as a passageway from respondent's house to town allowed the sale, which was also approved by Archdiocese’s
proper. Oeconomous.

Furthermore, it claims that spouses Rubi were the rightful In view of the foregoing, it is established that there was no
buyers for occupying the 215sqm meter lot as deliberate, willful or fraudulent act committed by Pante that
misled the Church to give consent to the sale.
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 As a matter of fact, it was the Church who acted in bad faith
was secured through its mistaken belief that Pante was a as he still sold the subject lot to Sps. Rubi when it has not yet
qualified "occupant," RTC annulled the contract between the secured a court ruling that its contract with Pante is invalid.
Church and Pante, pursuant to Art. 1390 of the Civil Code.
WHEREFORE, we DENY the petition for review on certiorari,
It upheld the sale in favor of Sps. Rubi due to Pante’s three- and AFFIRM the decision of the Court of Appeals dated May
year delay in payment and admission that subject lot has long 18, 2006, and its resolution dated August 11, 2006, issued in
been occupied by Sps. Rubi’s predecessors. CA-G.R.-CV No. 65069. Costs against the Roman Catholic
Church.
Pante appealed to CA which granted the same and reversed
RTC’s Decision. SO ORDERED.

Hence, this petition for review on certiorari.

#2 SPS. GENOTIVA vs. EQUITABLE-PCI BANK (now BDO)
ISSUE: WHETHER OR NOT CHURCH’S CONSENT WAS VITIATED
AS PANTE MISREPRESENTED HIMSELF AS OCCUPANT OF THE FACTS: Goldland Equity, Inc., wherein petitioner Calvin
SUBJECT PROPERTY? Genotiva is one of the stockholders, was granted a P2M loan
by BDO as evidenced by a Promissory Note.
RULING: No. The Court has held that no misrepresentation
existed vitiating the Church’s consent and invalidating the Meanwhile, Calvin's wife, Violet, was an employee of BDO
contract. Cagayan De Oro.

Article 1331. In order that mistake may invalidate consent, it The Sps. Genotiva filed a Complaint for Declaration of Nullity
should refer to the substance of the thing which is the object of Contract, Reconveyance and Damages with Prayer for a
of the contract, or to those conditions which have principally Writ of Preliminary Injunction and/or TRO against BDO as the
moved one or both parties to enter into the contract. latter allegedly refused to release the following unless they
execute a Real Estate Mortgage over subject property to
Mistake as to the identity or qualifications of one of the secure a loan of Goldland:
parties will vitiate consent only when such identity or a) Violet Genotiva's retirement benefits and
qualifications have been the principal cause of the contract.
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b) owner's copy of TCT which was used for a housing loan (1) that the intimidation must be the determining cause of the
already fully paid. contract, or must have caused the consent to begiven;
(2) that the threatened act be unjust or unlawful;
As they had no choice, they acceded to the demands and (3) that the threat be real and serious, there being an evident
signed the Real Estate Mortgage. disproportion between the evil and the resistance which all
men can offer, leading to the choice of the contract as the
Furthermore, the Genotivas offered to pay P500k to BDO to lesser evil; and
redeem the collateral. However, it was applied as payment of (4) that it produces reasonable and well-grounded fear from
interest on Goldland's loan. Lastly, the subject property was the fact that the person from whom it comes has the
foreclosed and scheduled for auction sale. necessary means or ability to inflict the threatened injury.

BDO, in their Answer, alleged that Violet's clearance was In view of the foregoing, BDO’s “threat” of withholding
withheld due to a Deed of Suretyship, previously executed by Violet’s retirement benefits is not what the law refers to as
the Genotivas and other stockholders of Goldland for the intimidation.
P2M loan.
Moreover, it was the Sps. Genotiva who WILLINGLY OFFERED
RTC rendered judgment in favor of the Genotivas and ruled to execute REM in exchange of the release of Violet’s
that under BDO’s undue influence, the petitioner spouses retirement benefits.
executed REM. Thus, subject contract (REM) was voidable.
Contrary to Genotiva’s claim and RTC’s decision, there is no
Moreover, trial court ordered BDO to return the P500K as it undue influence from BDO.
was invalidly applied to the interest on Goldland’s loan.
There is undue influence "when a person takes improper
A Motion for Writ of Execution Pending Appeal was filed by advantage of his power over the will of another, depriving the
the Genotivas. latter of a reasonable freedom of choice.”

BDO then filed an Urgent Motion to Stay Discretionary For undue influence to be present, the influence exerted must
Execution by Posting Superdeas Bond. However, it was have so overpowered or subjugated the mind of a contracting
denied. They then elevated the case to CA. party as to destroy their free agency, making [them] express
the will ofanother rather than [their] own."
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. In the case at bar, there was neither influence exerted by BDO
Genotiva as sureties under Art. 1216 of the NCC. Therefore, on the Sps. Genotiva nor deprivation of free agency when
BDO had the right to withhold Violet’s retirement benefits as petitioner spouses signed the subject contract.
one of Goldland’s sureties, apply it to Goldland’s due interest,
and foreclose the subject property due to Goldland’s Being forced into a situated situation does not constitute
nonpayment of its obligation to the bank. vitiated consent.

Furthermore, CA ruled that RTC erred in finding mortgage In fact, the Court has held that the spouses may still resort to
violable because Sps. Genotiva’s consent was vitiated by other means, such as filing a judicial action against BDO and
undue influence. yet, they did not. The Genotivas willingly offered to mortgage
their property to BDO in exchange for the release of Violet’s
Petitioner spouses moved for reconsideration but was denied. retirement benefits.

Hence, this Petition for Review. On the issue of novation of Deed of Suretyship, it was raised
for the first time. Thus, the Court may not address the issue
ISSUES: so as not to offend the rules of fair play, justice and due
1) Whether or not subject contract is valid despite Sps. process.
Genotiva’s claim of vitiated consent?
2) Whether or not BDO had the right to retain the P500l On the issue of BDO’s application of P500k to Goldland’s loan,
under the Deed of Suretyship? the Court has held that respondent bank does not have the
right to retain the money and apply it to Goldland’s due
RULING: Yes. The Court has held that the contract or the Real interest.
Estate Mortgage is valid.
While a creditor has a right to proceed against the surety, the
For intimidation to vitiate consent, the ff requisites must be law does not give him the right to deprive said surety without
present: 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 Simulation is "the declaration of a fictitious will, deliberately
proceeding for collection or enforcement of the contract made by agreement of the parties, in order to produce, for
should the Sps. Genotiva declined to apply it on Goldland’s the purposes of deception, the appearances of a juridical act
loan. While he has the right to collect from the petitioner which does not exist or is different what that which was really
spouses, it should be done so through lawful means. executed."

WHEREFORE, the Petition is hereby PARTLY GRANTED. The Requisites are:

March 28, 2014 Decision of the Court of Appeals inCA-G.R. CV (a) an outward declaration of will different from the will of the
NO. 02724-MIN and CA-G.R. SP NO. 04424-MIN is SET ASIDE parties;
and a new one entered ordering EQUITABLE-PCI BANK (now (b) the false appearance must have been intended by mutual
BANCO DE ORO UNIBANK, INC.) to pay the following amounts agreement; and
to SPOUSES CALVIN LUTHER and VIOLET GENOTIVA: (c) the purpose is to deceive third persons.

(1) Five Hundred Thousand Pesos (P500,000.00), with interest In the case at bar, none of these are present in the assailed
of twelve percent (12%) per annum, computed from the filing transaction.
of the Complaint on February 18, 2003 to June 30, 2013, and
six percent (6%) Furthermore, fraud is never presumed, but must be both
per annum from July 1, 2013 until full payment; alleged and proved.
(2) moral damages in the amount of Fifty Thousand Pesos
(P50,000.00); and It cannot be said that Romana exercised undue influence to
(3) attorney’s fees in the amount of Fifty Thousand Pesos obtain Gaudencia’s consent to sale as the latter was weak and
(P50,000.00). dependent on the former for her daily needs.

SO ORDERED. Undue influence depends upon the circumstances of each

case and not on bare academic rules.
#3 LOYOLA vs. CA, CHILDREN OF MARIANO ZARRAGA, and
HEIRS OF JOSE ZARRAGA Three elements must be present for undue influence to be
established to justify the cancellation of an instrument:
FACTS: Subject property in this case, a parcel of land (Lot 115- (a) a person who can be influenced;
A-1) was originally owned by siblings, Mariano and Gaudencia (b) the fact that improper influence was exerted;
Zarraga. (c) submission to the overwhelming effect of such unlawful
conduct.
Petitioners in this case are the children of Victorina Zarraga
vda. Loyola, sister of Mariano and Gaudencia. Though they claim that Gaudencia was old and senile, and
therefore, incapable of independent and clear judgment; the
Meanwhile, private respondents here except those heirs of Court has held that a person is not incapacitated to contract
Jose Zarraga are the children of Mariano, and the heirs of Jose just because of advanced years and physical infirmities.
Zarraga.
Undue influence is not to be inferred from age, sickness, or
Gaudencia allegedly sold to private respondents her share in debility of body, if sufficient intelligence remains.
Lot 115-A-1 for P34K, evidenced by a notarized document
“Bilihang Tuluyan ng Kalahati (1/2) ng Isang Lagay ng Lupa.” Moreover, no proof was shown that Gaudencia lost her
mental faculties of the sale. Petitioners did not even rebut
Victorina, together with her sister Cecilia, filed a complaint notary public’s testimony that Gaudencia is still alert and
before RTC Biñan, Laguna, to annul the sale and TCT. sharp.

Trial court rendered judgment in favor of the petitioners. Thus, Gaudencia’s consent to sale is valid. Therefore, DOAS is
However, CA reversed RTC’s decision. A Motion for also valid.
Reconsideration was filed but was denied.
WHEREFORE, the petition is DENIED, and the assailed decision
Hence, this petition for review on certiorari. of the Court of Appeals AFFIRMED. Costs against petitioners.

ISSUE: WHETHER OR NOT THE DEED OF ABSOLUTE SALE IS SO ORDERED.

VALID?
#4 SPS. CARMEN TONGSON AND JOSE TONGSON
RULING: Yes, the Court has held that DOAS is valid even (substituted by his children) vs. EMERGENCY PAWNSHOP
though petitioners contend that DOAS is invalid as it was BULA, INC. and DANILO NAPALA
simulated.
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A valid contract requires the concurrence of the following

FACTS: Sps. Tongson executed with Napala an Memorandum essential elements:
of Agreement as they find the latter’s offer to purchase their (1) consent or meeting of the minds, that is, consent to
364sqm of land for P3M acceptable. transfer ownership in exchange for the price;
(2) determinate subject matter; and
A DOAS was prepared indication consideration of P400K. (3) price certain in money or its equivalent.

When Carmen complained about this, Napala said not to In the case at bar, all essential elements are present.
worry as he will be the one to pay for the taxes and the net
amount of P3M will be received by the former. Though the Sps. Tongson claim that their consent was vitiated
by fraud, the Court ruled that it was not as the parties already
Another MOA was executed showing that land’s selling price consented and agreed to the sale transaction prior to the
is P400K, which replaced the previous MOA. issuance of the check.

P200k in cash was paid to Sps. Tongson and PDC with the Under Art. 1338 of the NCC, there is fraud when, through
amount of P2.8M was issued upon signing of the DOAS. insidious words or machinations of one of the contracting
However, the check was dishonored as it was “Drawn Against parties, the other is induced to enter into a contract which,
for Insufficient Funds.” without them, he would not have agreed to. In order that
fraud may vitiate consent, it must be the causal (dolo
Despite repeated demands, Napala failed to pay in full or causante), not merely the incidental (dolo incidente),
return the land. inducement to the making of the contract.

A Complaint for Annulment of Contract and Damages with a Additionally, the fraud must be serious.
Prayer for the Issuance of a TRO and a Writ of Preliminary
Injunction was filed before RTC Davao City against Napala. As the Court ruled that no causal fraud attended the
execution of the sales contract, there is still fraud committed
Napala said that the complaint is baseless as the Sps. Tongson by Napala as he assured the Tongsons that the check is
never returned the check as it was misplaced. sufficiently funded at its maturity.

RTC rendered decision in favor of Sps. Tongson. It ruled that Contracts undergo three stages – negotiation, perfection and
the Sps. Tongson were induced to enter contract of sale due consummation. The first two stages properly took place.
to Napala’s assurance that the check would not bounce. However, consummation never happened as even though the
However, it did. Thus, annulment of contract of sale is Tongsons as seller performed their obligation of executing
justified under Art. 1338 of the NCC as there was fraud. DOAS, Napala failed to fully pay his obligation to the
petitioner spouses.
EPBI and Napala appealed to CA.
As there was a substantial breach of their reciprocal
CA agreed with trial court’s decision. However, it disagreed obligation, the Sps. Tongson are entitled to rescission of the
that fraud employed by Napala may be a basis for annulment sales contract under Art. 1191 of the NCC.
of contract of sale. Nonetheless, due to the fraud committed
by Napala, Sps. Tongson are entitled to the payment of Rescission is proper and justified even though the Sps.
balance of P2.8M plus legal interest rate of 6% per annum. Tongson specifically prayed for annulment of the contract of
sale as it likewise prayed for “other reliefs which may be
Sps. Tongson filed a partial motion for reconsideration but deemed just equitable in the premises.” Considering the
was denied. substantial breach, EPBI and Napala must reconvey the
subject property and in turn, Sps. Tongson must refund the
Hence, this petition for review. initial payment of P200K.

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.