ENCARNACION CONSTRUCTION & INDUSTRIAL CORPORATION,

Petitioner vs. PHOENIX READY CONCRETE DEVELOPMENT &

CONSTRUCTION, INC., Respondent
G.R. No. 225402 (September 4, 2017)
Second Division

Justice Perlas – Bernabe

I. NATURE OF ACTION: Sum of Money

II. FACTS:

Phoenix entered into two (2) separate Contract Proposals and

Agreements (Agreements) 5 with ECIC for the delivery of various quantities of
ready-mix concrete. ECIC received the delivery in due course. However, despite
written demands from Phoenix, ECIC refused to pay. Hence, Phoenix filed the
Complaint for Sum of Money. In its Answer with Counterclaim for damages, ECIC
claimed that it opted to suspend payment since Phoenix delivered substandard
ready-mix concrete. RTC ruled in favor of Phoenix, which CA affirmed.

III. ISSUE: Whether or not the CA erred in denying ECIC's counterclaim for
damages.

IV. RULING:

No. ECIC maintains that it is entitled to damages because the Agreement

with Phoenix is void for being a contract of adhesion; and, the ready-mix
concrete was substandard, causing it to incur additional expenses.

A contract of adhesion is one wherein one party imposes a ready-made

form of contract on the other. It is a contract whereby almost all of its provisions
are drafted by one party, with the participation of the other party being limited to
affixing his or her signature or "adhesion" to the contract. However, contracts of
adhesion are not invalid per se as they are binding as ordinary contracts. While
the Court has occasionally struck down contracts of adhesion as void, it did so
when the weaker party has been imposed upon in dealing with the dominant
bargaining party and reduced to the alternative of taking it or leaving it,
completely deprived of the opportunity to bargain on equal footing.

In this case, there is no proof that ECIC was disadvantaged or utterly

inexperienced in dealing with Phoenix. There were likewise no allegations and
proof that its representative, Ramon Encarnacion, was uneducated, or under
duress or force when he signed the Agreement on its behalf. In fact, Encarnacion
is presumably an astute businessman who signed the Agreement with full
knowledge of its import. Case law states that the natural presumption is that one
does not sign a document without first informing himself of its contents and
consequences. This presumption has not been debunked.
SPOUSES FIRMO S. ROSARIO AND AGNES ANNABELLE DEAN-ROSARIO,
Petitioners vs. PRISCILLA P. ALVAR, Respondent
G.R. No. 212731 (September 6, 2017)
First Division

Justice Del Castillo

I. NATURE OF THE ACTION: Declaration of Nullity of Contract of Sale and

Mortgage, Cancellation of Transfer Certificates of Title and Issuance of new TCTs
with Damages

II. FACTS:

Agnes Annabelle Dean-Rosario borrowed from Priscilla Alvar a total of

Php 600,000.00, secured by real estate mortgages over two parcels of land. In
1990, the mortgages were discharged. Agnes executed two Deeds of Absolute
Sale over the two lots in favor of Priscilla's daughter, Evangeline Arceo for the
amount of Php 900,000.00 each. Evangeline later sold the lots to Priscilla also for
the same price. Priscilla then sent a demand letter to spouses Rosario asking
them to vacate Lot 1. This prompted the spouses to file a Complaint for
Declaration of Nullity of Contract of Sale and Mortgage, Cancellation of Transfer
Certificates of Title and Issuance of new TCTs with Damages. They alleged that
Priscilla deceived Agnes into signing the Deeds of Absolute Sale in favor of
Evangeline, as Agnes merely intended to renew the mortgages over the two lots.

In turn, Priscilla filed a case for Recovery of Possession. The cases were
consolidated and RTC rendered a Decision granting Priscilla's complaint while
denying that of spouses Rosario's. However, CA reversed ruling that although the
transfers from Agnes to Priscilla were identified as absolute sales, the contracts
are deemed equitable mortgages pursuant to Art. 1602 of the Civil Code. CA
further ruled that although the subject deeds of sale in favor of were actually for
mortgage, said type of simulation of contracts does not result in the nullification
of the deeds but requires the reformation of the instrument, pursuant to Art. 1365
of the Civil Code.

III. ISSUE: Whether or not a reformation of the contract is required before the
subject lots may be foreclosed.

IV. RULING:

No. Reformation of an instrument is a remedy in equity where a written

instrument already executed is allowed by law to be reformed or construed to
express or conform to the real intention of the parties. The rationale of the
doctrine is that it would be unjust and inequitable to allow the enforcement of a
written instrument that does not express or reflect the real intention of the parties.

In ruling that the Deeds of Absolute Sale were actually mortgages, CA, in
effect, had reformed the instruments based on the true intention of the parties.
Thus, the filing of a separate complaint for reformation of instrument is no longer
necessary because it would only be redundant and a waste of time. Besides, CA
already declared that absent any proof that spouses Rosario had fully paid their
obligation, Priscilla may seek the foreclosure of the subject lots. The parties'
intention to execute an equitable mortgage is sufficient reformation of such
instrument.