OBLIGATIONS AND CONTRACTS

MARIN V. ADIL G.R. NO. 47986

Facts:
The Armadas were expecting to inherit some lots from their uncle. Marin had hereditary rights in the
estates of her parents. A deed of exchange was executed wherein it was stipulated that both parties
acknowledge that the exchange operates to their individual and mutual benefit and advantage, for the
reason that the property being ceded, transferred, conveyed and unclaimed by one party to the other is
situated in the place where either is a resident resulting in better administration of the properties. But the
expected land was adjudicated to Soledad, sister of Marin. So, the Armadas and other heirs sued
Soledad for claiming to be the sole heir of their uncle, but ended in a compromise where the Armadas
were awarded two lots. Marin waived, renounced and quitclaimed her share in her parents estate in
favour of her another sister Aurora. She cannot anymore fulfil her obligations in her signed deed of
exchange with the Armadas. The Armadas filed a rescisorry action against Marin.
Issue:
Did Armadas action prescribe?
Held:
No. The action to declare contracts void and inexistent does not prescribe. It is evident from the deed of
exchange that the intention of the parties relative to the lots cannot be definitely ascertained. This
circumstance renders the exchange void.
OBLIGATIONS AND CONTRACTS
RONGAVILLA V. CA G.R. NO. 83974
Facts:
The Dela Cruz sisters were the aunts of Dolores Rongavilla. They borrowed P2,000 from the Rongavillas
to have their rooftop repaired. Later, petitioners went back to their aunts to have them sign a contract.
Taking advantage of their lack of education, the sisters were made to believe that such document,
typewritten in English, was just for the acknowledgment of their debt. After four years, petitioners asked
their aunts to vacate the land subject to litigation claiming that she and her husband were the new
owners. After verifying with the Registry of Deeds, the aunts were surprised that what they have signed
was actually a deed of sale. Their land title was cancelled and the ownership was transferred to their
nephews. The land was mortgaged with the Cavite Development Bank.
Issue:
Was the deed of sale void?
Held:
Yes. While petitioners claimed they were regularly paying taxes on the land in question, they had no
second thoughts stating at the trial and on appeal that they had resorted to doctoring the price stated in
the disputed Deed of Sale, allegedly to save on taxes. While it is true that public documents are
presumed genuine and regular under the Rules of Court, this presumption is a rebuttable presumption
which may be overcome by clear, strong and convincing evidence.
OBLIGATIONS AND CONTRACTS
CRISTOBAL V. GOMEZ G.R. NO. 27014
Facts:
Epifanio sold a property with pacto de retro to Yangco. It was stipulated that the property is redeemable
within five years. When the period expired, Yangco extended it. In order to redeem, Epifanio asked Banas
for a loan. Banas agreed, with the condition that Marcelino and Telesfora be responsible for the loan. The
two entered into a private partnership in participation which stipulated that the property shall be returned
to Epifanio as soon as the capital employed have been covered. Epifanio died. He left Paulina and their
children. Marcelino acquired exclusive rights over the property when Telesfora conveyed her interest to

him. Marcelino sold the property to Banas, with pacto de retro, redeemable within five years. He
redeemed it from Banas. Marcelino submitted a notarial document wherein Epifanio certifies that
Marcelino had requested him to draw up a notarial act showing the properties which Marcelino was
known to be the true owner. Marcelino relies upon this instrument as proving title in him, contending that
Epifanio and his successors are estopped from claiming said lot.
Issue:
Are the heirs of Epifanio estopped from claiming the property?
Held:
No. Estoppel may not be invoked by a person party to the collusion, by reason that he could not have
been misled. The document executed by Epifanio was merely laying the basis of a scheme to defeat
Yangcos rights under his contract of purchase of 1891, or to defeat Epifanios other creditors.
OBLIGATIONS AND CONTRACTS
DBP V. CA G.R. NO. 28774
Facts:
DBP bought 91,188.30 square meters of land, consisting of 159 lots, in the proposed Diliman Estate
Subdivision of the PHHC. However, the sale of the lots to DBP, Lots 2 and 4, which form part of said 159
lots, were still sold by PHHC to the spouses Nicandro, for which 2 deeds of sale were issued to them by
PHHC. Upon learning of PHHCs previous transaction with DBP, the spouses filed a complaint against
DBP and the PHHC to rescind the sale of Lots 2 and 4 by PHHC in favor of DBP. The CFI held that the
sale of Lots 2 and 4, to DBP is null and void, for being in violation of Section 13 of the DBP Charter.
Issue:
Do the spouses possess the legal personality to question the legality of the sale?
Held:
Yes. The spouses stand to be prejudiced by reason of their payment in full of the purchase price for the
same lots which had been sold to DBP by virtue of the transaction in question.The general rule is that the
action for the annulment of contracts can only be maintained by those who are bound either principally or
subsidiarily by virtue thereof. However, a person who is not obliged principally or subsidiarily in a contract
may exercise an action for nullity of the contract if he is prejudiced in his rights with respect to one of the
contracting parties, and can show the detriment which could positively result to him from the contract in
which he had no intervention.
OBLIGATIONS AND CONTRACTS
GOLDENROD V CA G.R. NO. 126812
Facts:
Barretto owned parcels of land which were mortgaged to UCPB. Barretto failed to pay; the properties
were foreclosed. Goldenrod made an offer to Barretto that it would buy the properties and pay off the
remaining balance of Barrettos loan with UCPB. It paid Barretto 1 million pesos as part of the purchase
price. The remaining balance would be paid once Barretto had consolidated the titles. On the date that
Goldenrod was supposed to pay, Goldenrod asked for an extension. UCPB agreed. When the extension
date arrived, Goldenrod asked for another extension. UCPB refused. Barretto successfully consolidated
the titles. Goldenrod informed Barretto that it would not be able to push through with their agreement. It
asked Barretto to return the 1 million pesos. Barretto did not give in to Goldenrods rescission. Instead, it
sold the property that was part of their agreement to Asiaworld.
Issue:
Should Goldenrod be paid back the 1 million pesos?
Held:
Yes. Rescission creates the obligation to return the things which were the object of the contract together
with the fruits and interest. Barretto is obliged to pay Goldenrod back because 1) Goldenrod decided to
rescind the sale; 2) the transaction was called off and; 3) the property was sold to a third person. By virtue

of the extrajudicial rescission of the contract to sell by Goldenrod, without opposition from Barretto, who in
turn sold it to a third person, Barretto had the obligation to return the 1 million pesos plus legal interest
from the date it received the notice of rescission.
OBLIGATIONS AND CONTRACTS
CABALIW V. SADORRA G.R. NO. 25650
Facts:
Cabaliw was the second wife of Benigno. During their marriage, they bought 2 parcels of land. They had a
daughter Soledad. Benigno abandoned his wife Cabaliw, thus the latter filed an action in court for
support. The Court ordered Benigno to pay her P75 a month. However, Benigno did not pay and instead
sold their property to his son-in-law Soterro. The transaction was done without Isidoras consent. Prior to
the sale, Soterro already knew that there was a judgment rendered against his father-in-law but
proceeded to buy the property anyway. When Cabaliw found out, she instituted an action along with her
daughter to recover the properties.
Issue:
Is there a presumption of fraud?
Held:
Yes. Alienations by onerous title are presumed fraudulent when made by persons against whome some
judgment has been rendered or some writ of attachment has been issued. Benigno was ordered by the
Court to pay Cabaliw support and he failed to do so. Instead, he sold his properties to his son-in-law. The
close relationship between Benigno and Soterro is a badge of fraud. Soterro knew about the judgment
against Benigno but proceeded to purchase the properties anyway. He cannot be said to be a purchaser
in good faith. The presumption of fraud is not overcome by the fact that the transactions were all made in
the nature of public instruments between Soterro and Benigno. The properties sold were conjugal
properties. These cannot be sold without Cabaliws consent.
DEC 20 2011
OBLIGATIONS AND CONTRACTS
MUNICIPALITY OF CAVITE V. ROJAS G.R. NO. 9069
Facts:
The municipal council of Cavite by Resolution No. 10, leased to Rojas some 70 or 80 square meters of
Plaza Soledad, on condition that she pay rent quarterly in advance according to the schedule fixed in
Ordinance No. 43, series of 1903 and that she obligate herself to vacate said land within 60 days
subsequent to notification to that effect. Upon such notification, however, she refused to vacate the land,
forcing the municipality to file a complaint before the CFI to order her to vacate the land. After a hearing of
the case, the CFI dismissed the complaint.
Issues:
(1) Is the contract valid?
(2) If in the negative, what are the obligations of the parties?
Held: (1) No. Article 1271 of the Old Civil Code, prescribes that everything which is not outside the
commerce of man may be the object of a contract, and plazas and streets are outside of this
commerce. Communal things that cannot be sold because they are by their very nature outside of
commerce are those for public use, such as the plazas, streets, common lands, rivers, fountains, etc.
(2) Rojas must restore and deliver possession of the land described in the complaint to the municipality of
Cavite, which in its turn must restore to her all the sums it may have received from her in the nature of
rentals just as soon as she restores the land improperly leased.
DEC 20 2011
OBLIGATIONS AND CONTRACTS,TRANSPORTATION LAW
EASTERN SHIPPING LINES, INC. V. MARGARINE-VERKAUFS-UNION GMBH G.R. NO. L-31087
93 SCRA 257
Facts:

MARGARINE-VERKAUFS-UNION, a corporation not engaged in business in the Philippines, was the

consignee of copra in bulk shipped from Cebu on board EASTERN SHIPPING LINESs vessel for
discharge at Hamburg, Germany. Petitioners bill of lading for the cargo provided that the contract shall be
governed by the laws of the Flag of the Ship carrying the goods. In case of average, same shall be
adjusted according to York-Antwerp Rules. While the vessel was off Gibraltar, a fire broke out aboard the
and caused water damage to the copra. EASTERN SHIPPING LINES rejected MARGARINEVERKAUFS-UNION GmbH s claim for payment.
Issue:
Should Article 848 of the Code of Commerce govern this case despite the bill of lading which expressly
contained for the application of the York-Antwerp Rules which provide for MARGARINE-VERKAUFSUNION GmbHs fun recovery of the damage loss?
Held:
No. We hold that the lower court correctly ruled the cited codal article to be not applicable in this particular
case for the reason that the bill of lading contains an agreement to the contrary. There is a clear and
irreconcilable inconsistency between the York-Antwerp Rules expressly adopted by the parties as their
contract under the bill of lading which sustains Easterns claim and the codal article cited by Margarine
which would bar the same.
A contract of adhesion as embodied in the printed bill of lading issued for the shipment to which the
consignee merely adhered, having no choice in the matter, and consequently, any ambiguity must be
construed against the author.