Chapter 6: Rescissible Contracts | Obligations and Contracts [PDF]

RESCISSIBLE CONTRACTS. Classification of Defective Contracts: 1. Rescissible Contracts – those validly entered into by

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Obligations and Contracts

Chapter 6: Rescissible Contracts

Article 1380 FEBRUARY 3, 2015MARCH 15, 2015 / JAIME ROBILLON Kontratang maybisang mapagkasunduan, ay maaring ikansila (pawalan bisa) sa mga pagkakataon itinalaga nang batas. Discussion and Case Digest by Ainna Fathi: RESCISSIBLE CONTRACTS Classification of Defective Contracts: 1. Rescissible Contracts – those validly entered into by the contracting parties, but because of them resulting to economic damage or lesion to one of the parties or a third person, OR for having been entered into in fraud of creditors, OR without knowledge and approval of judicial authority having custodia legis over the property involved, OR for being specially declared by law as rescissible may, for equitable reasons, be rescinded or set aside by the court (Articles 1380 and 1381). 2. Voidable or Annullable contracts – those where the consent of one party is defective either because of incapacity to give consent to a contract, or where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud (Article 1390). In other words, the consent is vitiated by any of the vices of consent. 3. Unenforceable Contracts – those which cannot be enforced in Court because of the existence of any of the following reasons: (1) they were entered into in behalf of another without authority or in excess of authority, (2) there is noncompliance with the Statute of Frauds, and (3) both contracting parties are incapacitated. They may be ratified in accordance with the law (Artticles 1403, 1406 and 1407). 4. Void or Inexistent Contracts – those which produce no legal effect for they do not exist in the eyes of the law (Article 1409). *** Other Defective Contracts (partially valid and partially ineffective) which do not fall in any of the classifications, are those ineffective only with respect to certain parties, but are effective as to other persons. These are called Relatively Ineffective Contracts. Examples (a) An assignment of the lease by the lessee without the consent of the lessor is ineffective only as regards to the lessor; (b) Transfer of a Debt by the debtor to another, without the consent of the creditor, is ineffective as to the creditor; (c) The payment by a debtor to his creditor after the credit has been garnished or attached by a third person, is ineffective as to the latter. *** Relatively Ineffective Contract vs. Voidable Contract: Its ineffectiveness to the party concerned is produced ipso jure in Relatively ineffective contracts and a voidable contract does not become inoperative unless an action to annul is instituted and allowed. *** Relatively Ineffective Contract vs. Void Contract: The ineffectiveness of void contracts is absolute because it cannot be ratified, while relatively ineffective contracts can be made completely effective by the consent of the person as to whom it is ineffective, or by the cessation of the impediment which prevents its complete effectiveness. Distinctions Between and Among Defective Contracts: 1.) As to defect Void contracts: caused by lack of essential elements or illegality (Article 1409) Voidable contracts: defect is caused by vices of consent (Article 1390) Rescissible contracts: caused by economic damage/lesion either to one of the parties or a 3rd person (Article 1381) Unenforceable contracts: caused by lack of form, authority or capacity of both parties not cured by prescription (Articles 1403 and 1407); Entered into in behalf of another person without authority or in excess thereof; non-compliance with the Statue of Frauds or Incapacity of both contracting parties to give consent. 2.) As to Damage or Prejudice: Void contracts: damage or prejudice is not necessary Voidable contracts: damage or prejudice to the other party is not necessary Rescissible contracts: there must be damage/lesion or prejudice to one of the contracting parties or third person. Unenforceable contracts: damage or prejudice is not necessary 3.) As to effect (Legal) Void contracts: no legal effect, as a general rule (except void marriages under Articles 36 and 53. Voidable contracts: valid and enforceable until they’re annulled by a competent court (Article 1390, last paragraph) Rescissible contracts: valid and enforceable until rescinded by a competent court (Article 1380) Unenforceable contracts: can’t be enforced in court without proper ratification; Inoperative until ratified. (Article 1405) 4.) As to Remedy or Action Void contracts: Declaration of Nullity of the Contract Voidable contracts: Annulment of Contract Rescissible contracts: Rescission or rescisory action Unenforceable contracts: a personal defense when the plaintiff pursues a specific performance case or complaint for damages based on breach of contract. 5.) As to direct, indirect or collateral attack (Nature of Action) Void contracts: can be attacked both directly, indirectly and collaterally Voidable contracts: can be attacked both directly and collaterally where direct action is needed either in the complaint or as a counter claim Rescissible contracts: direct attack only Unenforceable contracts: can be attacked both directly and collaterally; Indirect attack is allowed in the form of a defense 6.) As to who can assail/question/attack Void contracts: contracting parties, but also a 3rd person whose interest is directly affected Voidable contracts: only a contracting party (principally or subsidiarily obliged under the contract) – (Article 1397) Exception: a 3rd person who is prejudiced Rescissible contracts: contracting parties, but also a 3rd person who is prejudiced or damaged by the contract/cerditors who are prejudiced Unenforceable contracts: only a contracting party (Article 1438) – 3rd persons cannot assail 7.) As to ratification Void contracts: can’t be ratified (Article 1409, last paragraph) Voidable contracts: susceptible to ratificadtion (Article 1392) Rescissible contracts: susceptible to convalidation but not of ratification proper Unenforceable contracts: susceptible to ratification (Article 1495) 8.) As to prescription to declare nullity Void contracts: no prescription for a declaration of nullity, inexistence or defense of nullity Voidable contracts: action for annulment or defense of annulability can prescribe Rescissible contracts: action for prescription can prescribe Unenforceable contracts: corresponding action for recovery if there was total or partial performance of the unenforceable contract under no. 1 or 3 Art. 1403 of the Civil Code may prescribe 9.) As to curative effect of prescription and susceptibility to prescription Void contracts: can’t cured by prescription; Action for declaration of nullity or the putting of the defense of nullity of the contract does not prescribe (Article 1410) Voidable contracts: can be cured by prescription; Action for annulment prescribes after four years (Article 1391) Rescissible contracts: can be cured by prescription; Action for rescission prescribes after four years (Article 1389) Unenforceable contracts: can’t be cured by prescription; Action for recovery or action for specific performance or for damages, for breach of contract also prescribe. There, being no specified period: it could be 10 years if the basis of the action is a written contract, or 6 years if unwritten. (Articles 1144 and 1145) Case: Onglenco vs. Ozaeta (70 Phil. 43) FACTS

PETITIONER: Rosendo Onglenco RESPONDENT: Roman Ozaeta and Melitona Hernandez PONENTE: Laurel, J. This is a petition for certiorari for the contention of the petitioner that the CA erred in ruling that the subject land’s sale should be annulled and that the respondents are not absolute owners of the land but with the right to its immediate and peaceful possession. The case was initially filed in the CFI of Tayabas by the petitioner against the respondents praying that he be declared the sole owner and possessor of the subject land and that the sale of it executed by the Provincial Sheriff of Tayabas by virtue of a writ of execution in Civil Case 3506 in the same court, conveying the aforesaid land to the respondents, be annulled. The land in question was owned to Gregorio Hernandez and Paciencia Ona. After Hernandex’ death, Ona and her children sold the same to spouses Villanueva and Macalalag. The latter defaulted in paying their balance that lead the former to file a case (Civil Case 3506) against the spouses. The judgment was affirmed on appeal on February 2nd 1935. Further, the petitioner alleged that the respondents sold the subject land to them in January 11th 1935 and its deed of conveyance was provided in June 22nd of the same year. When the subject land was the subject of execution in Civil Case 3506, the petitioners presented a Third-Party Claim. On the other hand, the respondents claimed that they acquired interest through pacto de retro for the failure of the original owners to exercise their right of redemption and that they acquired the subject property through the execution of July 29, 1935 in Civil Case 3506, with the Shereff’s sale being definitive on September 7, 1936 in default of redemption by the redemption debtors. It was registered in the Office of the Register of Deeds on September 14, 1936. The Court of Appeals found and so held that, as the alleged sale from Villanueva and Macalalag to the petitioner took place on January 11 1935, or subsequent to the judgment against his vendors in civil case No 3506, it was presumptively fraudulent.

ISSUE/S

Whether the sale can be rescinded .

LAWS

Article 1380. Contracts validly agreed upon may be rescinded in the cases established by law. (1290)

HOLDINGS

No. The sale cannot be rescinded. Contracts capable of rescission are those validly entered into (Art. 1290. Civil Code), as an action to rescind is founded upon and presupposes the existence of a contract (Tan Chay Heng vs. West Coast Life Insurance Co., 51 Phil., 80) The Court of Appeals held that the sale is to be presumed fraudulent for having been executed posterior to the entry of the judgment against the petitioner’s supposed vendors in civil case No. 3506, evidently in pursuance of the provisions of article 1297 of the Civil Code. But as there is nothing else in the appealed decision to indicate that rescission was contemplated under article 1291 of said Code, the aforesaid presumption must have been considered merely as one of the grounds for holding that the sale is fictitious.

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Article 1381 FEBRUARY 3, 2015MARCH 14, 2015 / JAIME ROBILLON Ang sumusunod na mga kontrata ay maaring ikansila: 1. Yaong mga ipinasok ng mga tagapangalaga kapag ang kanilang inaalagaan na kanilang kinakatawan ay walang kakayahan mahigit sa ika apat ng halaga ng mga bagay na siyang kadahilanan; 2. Yaong mga napagkasunduan na patungkol sa wala, kung ang huli ay mayroon kwalang kakayahan na nakasaad sa naunang bilang; 3. Yaong mga pagsasaayos na maypanlinlang sa mga nagpapautang ang nahuli ay hindi na sa anu man paraan makaka singil pa; 4. Yaong mga nauukol sa mga bagay na napapailalim ng hukuman kung iyon ay pinasok ng nasasakdal na walang kaalaman at pagsang-ayon ng mga nasasakdal o ng hukuman may karampatan kapangyarihan; 5. Lahat nang ibang mga kontrata na lalong itinakda ng batas na maaring ipawalang bisa/ ikansila; Halimbawang kaso: Cannu v Galang 459 SCRA 80 CASE. DIONE SPS. FELIPE AND LETICIA CANNU, petitioners, vs. SPS. GIL AND FERNANDINA GALANG AND NATIONAL HOME MORTGAGE FINANCE CORPORATION,respondents. FACTS: Respondents-spouses Gil and Fernandina Galang obtained a loan from Fortune Savings & Loan Association forP173,800.00 to purchase a house and lot located at Pulang Lupa, Las Piñas, with an area of 150 square meters covered by Transfer Certificate of Title (TCT) No. T-8505 in the names of respondents-spouses. To secure payment, a real estate mortgage was constituted on the said house and lot in favor of Fortune Savings & Loan Association. In early 1990, NHMFC purchased the mortgage loan of respondents-spouses from Fortune Savings & Loan Association for P173,800.00. Respondent Fernandina Galang authorized4 (http://www.lawphil.net/judjuris/juri2005/may2005/gr_139523_2005.html#fnt4) her attorney-in-fact, Adelina R. Timbang, to sell the subject house and lot. Petitioner Leticia Cannu agreed to buy the property for P120,000.00 and to assume the balance of the mortgage obligations with the NHMFC and with CERF Realty5 (http://www.lawphil.net/judjuris/juri2005/may2005/gr_139523_2005.html#fnt5) (the Developer of the property). A Deed of Sale with Assumption of Mortgage Obligation10 (http://www.lawphil.net/judjuris/juri2005/may2005/gr_139523_2005.html#fnt10) dated 20 August 1990 was made and entered into by and between spouses Fernandina and Gil Galang (vendors) and spouses Leticia and Felipe Cannu (vendees) over the house and lot in question Petitioners paid the “equity” or second mortgage to CERF Realty.17 (http://www.lawphil.net/judjuris/juri2005/may2005/gr_139523_2005.html#fnt17) Despite requests from Adelina R. Timbang and Fernandina Galang to pay the balance of P45,000.00 or in the alternative to vacate the property in question, petitioners refused to do so. In a letter18 (http://www.lawphil.net/judjuris/juri2005/may2005/gr_139523_2005.html#fnt18) dated 29 March 1993, petitioner Leticia Cannu informed Mr. Fermin T. Arzaga, Vice President, Fund Management Group of the NHMFC, that the ownership rights over the land covered by TCT No. T-8505 in the names of respondents-spouses had been ceded and transferred to her and her husband per Deed of Sale with Assumption of Mortgage, and that they were obligated to assume the mortgage and pay the remaining unpaid loan balance. Petitioners’ formal assumption of mortgage was not approved by the NHMFC.19 (http://www.lawphil.net/judjuris/juri2005/may2005/gr_139523_2005.html#fnt19) Because the Cannus failed to fully comply with their obligations, respondent Fernandina Galang, on 21 May 1993, paid P233,957.64 as full payment of her remaining mortgage loan with NHMFC.20 (http://www.lawphil.net/judjuris/juri2005/may2005/gr_139523_2005.html#fnt20) Petitioners opposed the release of TCT No. T-8505 in favor of respondents-spouses insisting that the subject property had already been sold to them. Consequently, the NHMFC held in abeyance the release of said TCT. ISSUES: If the rescission and annulment of the Deed of Sale with Assumption of Mortgage valid. HELD: Court is of the view that plaintiffs have no cause of action either against the spouses Galang or the NHMFC. Plaintiffs have admitted on record they failed to pay the amount of P45,000.00 the balance due to the Galangs in consideration of the Deed of Sale With Assumption of Mortgage Obligation (Exhs. “C” and “3”). Consequently, this is a breach of contract and evidently a failure to comply with obligation arising from contracts. . . In this case, NHMFC has not been duly informed due to lack of formal requirements to acknowledge plaintiffs as legal assignees, or legitimate tranferees and, therefore, successors-in-interest to the property, plaintiffs should have no legal personality to claim any right to the same property.

Article 1382 FEBRUARY 3, 2015MARCH 14, 2015 / JAIME ROBILLON Mga kabayaran ginawa sa kadahilanan nang karukhaan para sa mga obligasyon na kung saan ang pagtupad ng may pagkakautang ay hindi na mapipilit doon sa panahon na sila ay apektado ay dapat ikansila na. Halimbawang kaso: Asian Banking v Nable Jose (51Phil 763)/Asian Banking Corp v Corcuera(51 Phil. 781) CASE DIGEST BY BONG REYES ASIA BANKING CORPORATION VS. NABLE JOSE FACTS: Lichauco Corporation is the owner of Hacienda Sevitana and Sapangbalen. Stockholders of the said corporation were Faustino Lichauco and her sister Nable Jose. Faustino contracted a loan to Asia Baking Corporation amounting to P70, 000.00 to save their farm of sugarcane because of business troubles. Since the business of Faustino did not do well and he did not even pay his loan to the bank. Asia Banking Corporation file a complaint against Faustino for recovery of P146,242.11 due and owing it to Lichauco Corporation. The bank upon their agreement wanted to get the hacienda from Faustino. Without the knowledge of her sister Nable Jose that Faustino contracted an agreement concerning the hacienda, she questioned it since the property was also owned by her. A certificate of registry was issued in her favor as the sole and exclusive owner of the property. ISSUE: Whether or not the agreement between Faustino and Asia Banking Corporation was valid? HELD: No, because Faustino owed the bank amounting to P70,000.00 only and the value of the hacienda was about P400,000.00 the property maybe dispose in consideration of its value.The property will not be permitted to alienate and his possessions because any transferred made because of insolvency is invalid under some circumstances.

Article 1383 FEBRUARY 3, 2015MARCH 15, 2015 / JAIME ROBILLON Ang pagkilos upang ikansila ay kaakibat, hindi siyang maaring isagawa maliban lamang kung ang partidong dumanas ng pinsala ay walang ibang kaparaanan legal na makakuha nang kabayaran Halimbawang kaso: Suria v IAC (151 SCRA 661) CASE :MARGARITA SURIA AND GRACIA R. JOVEN, petitioners, (Art 1383 JN Robillon) vs. HON. INTERMEDIATE APPELLATE COURT, HON. JOSE MAR GARCIA (Presiding Judge of the RTC of Laguna, Branch XXIV, Biñan, Laguna), and SPOUSES HERMINIO A. CRISPIN and NATIVIDAD C. CRISPIN, respondents.G.R. No. 73893 June 30, 1987 (GUTIERREZ, JR., J.) FACTS

PETITIONER: Margarita Suria, Plaintiffs-appellants, RESPONDENT: Hon Court of Appeals & Herminom/ Nativiadad Crispin, Appellee That on March 31, 1975, plaintiffs being the owners of a parcel of land situated at Barrio San Antonio, San Pedro, Laguna, entered into a contract denominated as DEED OF SALE WITH MORTGAGE, with herein defendants, a true copy of said contract. That the defendants violated the terms and conditions of the contract by failing to pay the stipulated installments and in fact only one installment due in July 1975 (paid very late in the month of September, 1975) was made all the others remaining unsettled to the present time; That repeated verbal and written demands were made by plaintiff upon the defendants for the payment of the installments, some of said written demands having been made on September 24, 1981, February 7, 1982, February 24, 1983, March 13, 1983, and April 12, 1983, but defendants for no justifiable reason failOn November 14, 1983, petitioners filed their answer with counterclaim. On July 16, 1984, petitioners filed a motion to dismiss complaint, alleging that:That plaintiffs are not entitled to the subsidiary remedy of rescission because of the presence of remedy of foreclosure in the Deed of Sale with Mortgage , secondly that, assuming arguendo that rescission were a proper remedy, it is apparent in the face of the Complaint that the plaintiffs failed to comply with the requirements of law, hence the rescission was ineffective, illegal, null and void, and invalid. On July 26, 1984, private-respondents filed their opposition to the above motion.In the meantime, on August 6, 1984, petitioners formerly offered to pay private-respondents all the outstanding balance under the Deed of Sale with Mortgage, which offer was rejected by private respondents on August 7, 1984. On November 26, 1984, the respondent-Court denied the motion to dismiss.

ISSUE/S

Whether or not the seller can resort to the remedy of rescission under Art 1191 which provides that the subsidiary and equitable remedy of rescission in case of breach of reciprocal obligation.

LAWS

Article 1883 The action for rescission is subsidiary; it cannot be instituted except when the party suffering damage has no other legal means to obtain reparation for the same.

HOLDINGS

1 There is no dispute that the parties entered into a contract of sale as distinguished from a contract to sell. By the contract of sale, the vendor obligates himself to transfer the ownership of and to deliver a determinate thing to the buyer, who in turn, is obligated to pay a price certain in money or its equivalent (Art. 1458, Civil Code). From the respondents’ own arguments, we note that they have fully complied with their part of the reciprocal obligation. 2. The petitioners’ breach of obligations is not with respect to the perfected contract of sale but in the obligations created by the mortgage contract. The remedy of rescission is not a principal action retaliatory in character but becomes a subsidiary one which by law is available only in the absence of any other legal remedy. 3. The relationship between the parties is no longer one of buyer and seller because the contract of sale has been perfected and consummated. It is already one of a mortgagor and a mortgagee. In consideration of the petitioners’ promise to pay on installment basis the sum they owe the respondents, the latter have accepted the mortgage as security for the obligation. 3The petitioners have offered to pay au past due accounts. Considering the lower purchasing value of the peso in terms of prices of real estate today, the respondents are correct in stating they have suffered losses. However, they are also to blame for trusting persons who could not or would not comply with their obligations in time. They could have foreclosed on the mortgage immediately when it fell due instead of waiting all these years while trying to enforce the wrong remedy. 4. The petition is hereby GRANTED. The Intermediate Appellate Court’s decision is REVERSED and SET ASIDE. The petitioners are ordered to pay the balance of their indebtedness under the Deed of Absolute Sale with Mortgage with legal interests from the second installment due on October 24, 1975 until fully paid,

Article 1384 FEBRUARY 3, 2015MARCH 13, 2015 / JAIME ROBILLON Pagkakansila ay maaari lamang hangang doon lamang sa kinakailangan sakop ng pangangailangan sumaklaw sa mga pinsalang nangyari. Pagpuna: Ang pagkansila ay maaring buo o kabahagi lamang. Ang pagkakansila ay upang ihiwalay ang mga damyos o pinsala natamo ng nagkasundo at maging ang ibang partido. Kapag ang pagkansila ay hukuman ang nag pasiya, iyon at magiging sa kapakanan ng sinu man dumulog sa hukuman lamang. Other Illustration (by Allan Pailan): A is to deliver 1000 packages of sardines amounting P10,000.00 to B, due to the fault of A causes 200 packages of sardines lost in the amount of P2,000.00. A should only pay P2,000.00 to B.

Article 1385 FEBRUARY 3, 2015MARCH 15, 2015 / JAIME ROBILLON Pagkakansila ay lumilikha ng obligasyon na mag sauli ng bagay na kung saan iyon ang dahilan ng kontrata, kasama ang mga bunga, ang prisyo kasama ang tubo. Kaalinsunod, iyon ay maaring isagawa lamang kapag sino man ang humiling ng pagkansila ay makakapagsauli kung saan sapilitan niyan dapat balik. Alin man maaring pagkansila mangyayari kapag ang bagay na siyang sanhi ng kuntrata ay legal na hawak ng ibang tao na hindi gumawa ng walang masamang balakin. Kung sakali, pagbabayad nang mga damyos ay maaring hilingin mula sa taong may kinalaman sa pagkawala. Case Digest by Ainna Fathi: Case: Goldenrod vs. CA (299 SCRA 141) FACTS

PETITIONER: Goldenrod, Inc. RESPONDENT: Court of Appeals, Pio Baretto & Sons, Inc., Pio Baretto Realty Development, Inc., and Anthony Que PONENTE: Bellosillo, J. Baretto and Sons owned forty three parcels of registered land which were mortgaged with UCPB. In 1988, Baretto and Sons have not paid its obligation with UCPB, making foreclosure of the mortgage forthcoming. Goldenrod, Inc. offered to buy the property from Baretto and Sons and issued Php1,000,000.00 as earnest money for their purchase. The parties agreed that the former will settle Baretto and Sons’ obligation with UCPB for 24.5 Million Pesos, with the deadline set by the bank, and 20 Million Pesos as the balance for the purchase price of the property. Goldenrod failed to pay UCPB the 24.5Million Php loan obligation of Baretto Realty on the deadline set for the payment. They asked for 3 extensions with the second and third requests for extension denied by the bank. Upon reconsolidation of the properties (43 titles into 2 lots), Baretto and Sons claimed that they incurred expenses of 250,000php in the reconsolidation process. Goldenrod through their agent, sent a letter to Anthony Que, informing him of their inability to purchase the property due to UCPB’s denial of their request for payment extension. In the same letter, the agent also demanded the refund of the earnest money. The next day, Baretto Realty sold Lot 2 of the consolidated lots to AsiaWorld for 23Million PHP. The lot was transferred to the ownership of AsiaWorld by way of “dacion”. After several demands by the petitioner that their earnest money be returned which were unheeded, Golderod filed a complaint with the RTC of Manila against private respondents for the return of 1,000,000PHP and the payment of damages including lost interests. Respondents contended that it was the parties’ agreement that the earnest money would be forfeited to answer for losses and damages that might be suffered by the latter in case of failure by petitioner to comply with the terms of their purchase agreement. The RTC ruled in favor of Goldenrod. Baretto and Sons filed for the appeal which was held in their favor, thus this SC case.

ISSUE/S

Whether the 1,000,000PHP given by GoldenRod as earnest money to Baretto and Sons be forfeited in the rescission of their contract.

LAWS

Article 1385. Rescission creates the obligation to return the things which were the object of the contract, together with their fruits, and the price with its interest; consequently, it can be carried out only when he who demands rescission can return whatever he may be obliged to restore. Neither shall rescission take place when the things which are the object of the contract are legally in the possession of third persons who did not act in bad faith. In this case, indemnity for damages may be demanded from the person causing the loss. (1295)

HOLDINGS

No. The 1,000,000Php earnest money given by Goldenrod to Baretto and Sons cannot be forefeited. It is discussed in Article 1385 that rescission creates the obligation to return the things which were the object of the contract, together with their fruits, and the price with its interest. Whenever earnest money is given in a contract of sale, it shall be considered as part of the purchase price and as proof of the perfection of the contract. Petitioner clearly stated without any objection from private respondents that the earnest money was intended to form part of the purchase price. It was an advance payment which must be deducted from the total price. The parties could not have intended that the earnest money would be forfeited should the buyer fail to pay the balance of the price, especially in the absence of a clear and express agreement. Respondents did not give any objection to the rescission of the agreement. They even sold Lot 2 of the consolidated properties to AsiaWorld, the day after Anthony Que (of Baretto Realty) received the letter regarding the rescission and the refund request of the earnest money by the petitioner. Moreover, the right to rescind contracts is not absolute and is subject to scrutiny and review by the proper court. We held further, in the more recent case of Adelfa Properties, Inc. v. Court of Appeals, rescission of reciprocal contracts may be extrajudicially rescinded unless successfully impugned in court. If the party does not oppose the declaration of rescission of the other party, specifying the grounds therefor, and it fails to reply or protest against it, its silence thereon suggests an admission of the veracity and validity of the rescinding party’s claim. By virtue of the extrajudicial rescission of the contract to sell by petitioner without opposition from private respondents who, in turn, sold the property to other persons, private respondent BARRETTO REALTY, as the vendor, had the obligation to return the earnest money of P1,000,000.00 plus legal interest from the date it received notice of rescission from petitioner, i.e., 30 August 1988, up to the date of the return or payment. It would be most inequitable if respondent BARRETTO REALTY would be allowed to retain petitioner’s payment of P1,000,000.00 and at the same time appropriate the proceeds of the second sale made to another.

Article 1386 FEBRUARY 3, 2015MARCH 15, 2015 / JAIME ROBILLON Ang pagkansila na tinutukoy sa una at ikalawang bilang ng atikulong 1381 ay hindi papalit alinsunod doon sa contratang sinang0ayunan na ng hukuman Pagpuna: Kung ang kasunduan na pinasok nang kanyang tagapangalaga o kinatawan ay aprubado na ng hukuman na maysaklaw ng usapin panghukuman, ang nasabing kontrata ay hindi na maaaring ikansila ng nagkasundo. Ang nasabing hukuman ay dapat ang maysakop/saklaw at angkop na kapangyarihan at sinunod ang mga wastong kaparaanan. for Dion discussion

Article 1387 FEBRUARY 3, 2015MARCH 14, 2015 / JAIME ROBILLON Ang lahat ng mga kontrata na sa pamamagitan niyan ang mangungutang ay magpapakawala ng aririan ayon sa kabutihan loob na titulo ay ipagpapalagay na iyon ay pinasok na may panlilinlang sa mga nagpapautang, kapag ang nagbigay ay hindi naglaan nang sapat na ari-arian upang ibayad sa lahat ng mga pagkakautang napagkasunduan bago maganap ang donasyon. ang pag-aalis sapamamagitan ng huwad na titulo ay ipinagpapalagay na panlilinlang kapag ginawa ng tao laban sa kung kanino ang iabang pagpapasiya ay ginawa sa anu man kaparaanan o may utos na inilabas ng hukuman na isapi iyon sa pananagutan. Ang pasiya ng pagsasapi ay maaring hindi doon sa ari-arian pinakawalan na, at saka hindi na kinakailangan na iyon ay nakuha ng partido na hunihingi nang pagkansila. Bilang karagdagan sa pagpapalagay na iyo, ang paraan upang linlangin ang nagpapautang ay maaaring mapatunayan sa ibang pamamaraan na kinikilala ng batas ukol sa mga katibayan. Halimbawang kaso: Cabaliw v Sadorra (64 SCRA 310) ILLUSTRATION BY BONG REYES Ana contracted a loan to Jaime, the latter Ana could not pay Jaime because of her business troubles. Jaime sued Ana and then already settled in court after Ana paid partial of her loan. Ana sold his lot to Tony, after Jaime knew about it he told him about the balance of the loan of his seller. Jaime cannot compel the purchaser of land because special law prevails over civil code.

Article 1388 FEBRUARY 3, 2015MARCH 15, 2015 / JAIME ROBILLON Kung sinoman ang nakakuha na maymasamang hangarin sa bagay na inalis na may panlilinlang sa mga nagpapautang, ay magbabayad duon sa huli ukol sa mga damyos na kanyang sinapit dahil sa pagaalis, kung, sa anu man kadahilanan, iyon ay imposibli na naisauli niya sa kanila. Kapag mayroon dalawa o mahihgit pang pag aalis, ang naunang nakakuha ng pagaari ang siyang mananagot doon sa nauna at doon sa ibang magkakasunod. JN Robillon Illustration/Example: Allan convinced Bong his friend to buy his car pawned with Tambunting for 150,000 afraid that the pawn shop would take possession of his car after Allan failed to pay his loan notwithstanding demand to pay and redeem his car and after his his loan became overdue and demandable. While the said car was parked along the road in front of Bong residential house, the same car was rammed by a pavement roller (pison), and was consequently damaged beyond repair. Bong being a buyer in bad faith shall indemnify the pawnshop either for the amount of Allan loan or the monetary value of the car in question. for JNRobillon discussion

Article 1389 FEBRUARY 3, 2015MARCH 13, 2015 / JAIME ROBILLON Ang mga pagkilos na maghabol upang ipakansila ay magsisimula sa loob ng apat (4) na taon. Para sa mga taong sumasailalim pangangalaga at doon sa mga mawawala ang nasabing apat na taon ay hindi magsisimula hanggang sa mawala na ang kawalan ng kakayahan ng nauna, o hanggang sa malaman na ang kinarorouan ay malaman na.

Illustrative case digest by Allan Pailan:

G.R. No. L-11835 October 30, 1958

Fernando Hermosa Jr. – Juducial Administrator of the intestate estate of the deceased, Fernando Hermosa Sr. – plaintiff-appellant

vs.

Alfonso Zobel Y Roxas – defedant- appellee

FACTS:

a.) December 19, 1944- Fernando Hermosa Sr., owner of certain real estate in San Sebastian Spain , died , intestate proceedings were instituted in C.F.I. of samar for settlement of his estate and his daugther Luz Hermosa was appointed administratrix daughter Luz and a grandson Fernando Hermosa Jr.

b.) January 14, 1947, the administratrix requested permission from the court to sell the property located in Spain with a conformity of her co-heir Fernando Jr. which was to be made public Auction.

c.) April 5, 1943, the court granted the permission.

d.) October 23, 1947, the administratrix request permission to sell the property privately. The court granted permission to sell property.

e.) Alfonso Zobel was approached for property to buy it but, did not wish to have negotiation with heirs.

f.) Luz and Fernando agreed to have the property ceded and and adjudicated to one of them who may later carry on negotiation with prospective buyers.

g.) Luz Hermosa, renewed negotiation the sale of the property to Alfonso Zobel and agreed that the sale price would be P20,000.00 under the law of Spain, the property may re-purchase the sale price in Spanish pesetas at the rate of exchange.

h.) In order to protect the investment of the buyer, it was agreed to state in the deed of sale , the price of P80,000.

i.) Problem arose in connection with the tax that may be made to pay if the price were fixed at P80,000.00, so it was agreed that P60,000.00 to be appeared as payment or has been paid during Japanese occupation.

j.) December 10,1947, Luz Hermosa executed the necessary deed of sale with the remaining balance of P5,000 after the property had been registered in the name of the vendor.

k.) April 27, 1948, the remainder was in effect paid by Zobel to Luz Hermosa to complete the transaction.

l.) Luz Hermosa died and Fernando Hermosa Jr. was appointed as administrator of the estate of his late father. He demanded from Zobel the payment of the balance of P60,000 as it was indicated in the deed of sale. Zobel refused to accede his demand.

m.) May 28, 1954, Fernando Hermosa filed action in CFI of Samar asking for specific performance or the recission of sale plus damages, in his capacity as Judicial Administrator.

n.) The court found complaint unmeritorious and rendered judgment dismissing it but ordering the plaintiff to pay the defendant of the sum of P1000 as moral damages and P500 as attorney’s fees and cost.

ISSUE:

Whether or not that the action of rescission of the contract of sale by the plaintiff is enforceable.

HELD:

No, even if be granted that the plaintiff has sufficient legal ground to ask for the rescission of the sale , the fact remains that his right of action has already prescribe. It appears that he became of age on January 7, 1948 and he only brought the presentation on May 28, 1954, or more than four years after the he attained the age of majority. Under Article 1389 of NCC, Action for rescission prescribes in four years from removal of one’s incapacity, and this happened more than four years ago.

We entertain a different opinion considering that the plaintiff did not take part in the sale and so he was not aware of the circumstances under which it was carried out. Apparently he was of the belief that the real consideration was P80,000 as it was made to appear in the document and he brought this action in the belief that defendant has not paid the balance of P60,000.

The decision appealed from is affirmed with only modification that the award of damages and attorney’s fees should be eliminated.



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