47. ACOL vs. PHIL COMM CREDIT

Acol lost his credit card issued by respondent. He immediately informed the latter of such loss. PhilComm advised him to put into writing the notice of loss and to submit it, together with the extension cards of his wife and daughter, w/c Acold did.

Acol’s card was used by somebody which amounted to P76,067.28. The accredited establishments reported the invoices for such purchases to respondent which then billed petitioner for that amount. Acol refused to pay but respondent said: that it was the most “practicable procedure and policy of the company.” It cited provision no. 1 of the “Terms and Conditions Governing The Issuance and Use of the Bankard” found at the back of the application form:

xxx Holder’s responsibility for all charges made through the use of the card shall continue until the expiration or its return to the Card Issuer or until a reasonable time after receipt by the Card Issuer of written notice of loss of the Card and its actual inclusion in the Cancellation Bulletin. Xxx

W/N provision no. 1 of the Terms and Conditions was valid and binding on the petitioner, given that the contract was one of adhesion. NO.

The same being contrary to public policy. Article 1306 of the Civil Code prohibits contracting parties from establishing stipulations contrary to public policy.

As petitioner points out, the effectivity of the cancellation of the lost card rests on an act entirely beyond the control of the cardholder. Worse, the phrase “after a reasonable time” gives the issuer the opportunity to actually profit from unauthorized charges despite receipt of immediate written notice from the cardholder.

Under such a stipulation, petitioner could have theoretically done everything in his power to give respondent the required written notice. But if respondent took a “reasonable” time (which could be indefinite) to include the card in its cancellation bulletin, it could still hold the cardholder liable for whatever unauthorized charges were incurred within that span of time. This would have been truly iniquitous, considering the amount respondent wanted to hold petitioner liable for.

49. PNB vs. PADILLA Padilla was granted by PNB a credit line of P1.8M, secured by a Real Estate Mortgage, for a term of 2 years, with 18% interest per annum. Private respondent executed in favor of the PNB a Credit Agreement, 2 Promissory Notes—P90,000 each, and a Real Estate Mortgage Contract. All these contracts contained a uniform stipulation that PNB may increase the interest whenever it may please.

W/N the creditor, PNB, may unilaterally change or increase the interest rate stipulated at will and as often as it pleased. NO.

The unilateral action of PNB in increasing the interest rate on the private respondent’s loan violated the mutuality of contracts ordained in Art. 1308: The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them.

In order that obligations arising from contracts may have the force of law between the parties, there must be mutuality between the parties based on their essential equality. A contract containing a condition which makes its fulfillment dependent exclusively upon the uncontrolled will of one of the contracting parties is void.

Hence, even assuming that the P1.8M loan agreement between PNB and the private respondent gave PNB a license (although in fact there was none) to increase the interest rate at will during the term of the loan, that license would have been null and void for being violative of the principle of mutuality essential in contracts. It would have invested the loan agreement with the character of a contract of adhesion, where the parties do not bargain on equal footing, the weaker party’s (the debtor) participation being reduced to the alternative “to take it or leave it.” Such a contract is a veritable trap for the weaker party whom the courts of justice must protect against abuse and imposition.

PNB’s successive increase of the interest rate on the private respondent’s loan, over the latter’s protest, were arbitrary as they violated an express provision of the Credit Agreement—Sec. 9.01---that the terms “may be amended only by instrument in writing signed by the party to be bound as burdened by such amendment.” The increases imposed by PNB also contravene Art. 1956 of the Civil Code which provides that “no interest shall be due unless it has been expressly stipulated in writing.”

The debtor herein never agreed in writing to pay the interest increases fixed by the PNB beyond 24% per annum, hence he is not bound to pay a higher rate than that.

54. MONTECILLO vs. REYNES55. FRANCISCO vs. HERRERA56. CORONEL vs. CONSTANTINO57. LAUDICIO vs. ARIAS58. VILANUEVA vs. CA59. ADELFA –jovits60. SERRA vs. CA61. MALBAROSA vs. CA62. VDA. DE APE vs. CA Fortunato De Ape—1 of the 11 heirs of deceased—allegedly sold

his part of the inherited land to one Lumayno as evidenced by a RECEIPT. Lumayno wanted to register the claimed sale transaction, she demanded that Fortunato execute the corresponding deed of sale and to receive the balance of the consideration.

Fortunato denied Lumayno’s claim and insisted that what they had was an EXPIRED contract of LEASE. He never sold his share in Lot-A to Lumayno and that his signature appearing on the purported receipt was forged.

Lumayno: when their lease contract was about to expire they agreed instead to enter into a contract of sale. Thereafter, she asked her son-in-law Flores to prepare the aforementioned RECEIPT. Flores read the document to Fortunato and asked the latter whether he had any objection thereto. Fortunato then went on to affix his signature on the receipt.

W/N the receipt signed by Fortunato proves the existence of a contract of sale between him and Lumayno. NO.

A contract of sale is a consensual contract, thus, it is perfected by mere consent of the parties. For there to be a perfected contract of sale, however, the following elements must be present: consent, object, and price in money or its equivalent.

To be valid, consent must meet the following requisites: it should be intelligent, or with an exact notion of the

matter to which it refers; it should be free and it should be spontaneous.

Intelligence in consent is vitiated by error; freedom by violence, intimidation or undue influence; spontaneity by fraud.

In this jurisdiction, the GENERAL RULE is that he who alleges fraud or mistake in a transaction must substantiate his allegation as the presumption is that a person takes ordinary care for his concerns and that private dealings have been entered into fairly and regularly. The EXCEPTION to this rule is provided for under Article 1332 of the Civil Code which provides that "[w]hen one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former."Flores’ testimony: he was very much aware of Fortunato's inability to read and write in the English language, he did not bother to fully explain to the latter the substance of the receipt. It is precisely in situations such as this when the wisdom of Article 1332 of the Civil Code readily becomes apparent which is "to protect a party to a contract disadvantaged by illiteracy, ignorance, mental weakness or some other handicap.

63. MAYOR vs. BELEN Mayor—seller—sold to Belen—buyer—a parcel of land for P18K. Belen had paid almost 2/3 of the price when she RESOLD the same to Mayor, evidenced by Kasulatan ng Bilihang Tuluyan.

Belen accepted the same land as security for Mayor’s loan from her in the amount of P12K, evidenced by Kasulatan ng Sanglaan.

Belen then filed for ANNULMENT of these 2 Kasulatans grounded on FRAUD. Mayor made her believe that the first sale to her (Belen) was void and that she might lose what she had already paid which amounted to 70% of the purchase price.

ART. 1338. There is fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to.FRAUD refers to all kinds of deception, whether through insidious machination, manipulation, concealment or misrepresentation to lead another party into error.The deceit employed must be serious. It must be sufficient to impress or lead an ordinarily prudent person into error, taking into account the circumstances of each case.

Lourdes M. Belen had a limited educational attainment. Although the 2 Kasulatans executed in Tagalog, a close scrutiny thereof shows that they are

It turned out that the scheme was in fact a ruse employed by Romulo and Andrea to re-acquire the property, thus, Lourdes’s consent in the execution of the Kasulatan ng Bilihang Tuluyan and Kasulatan ng Sanglaan was obtained through fraud and undue influence.

W/N FRAUD attended the execution of the Kasulatan ng Bilihan and Kasulatan ng Sanglaan. YES.

practically literal translations of their English counterparts. Thus, the mere fact that the documents were executed in the vernacular neither clarified nor simplified matters for Lourdes who admitted on cross-examination that she merely finished Grade 3, could write a little, and understand a little of the Tagalog language.

CA not in fault when it invoked Article 1332 of the Civil Code which states:When one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former.

As aptly pointed out by the CA, the principle that a party is presumed to know the import of a document to which he affixes his signature is modified by the foregoing article. Under the said article, where a party is unable to read or when the contract is in a language not understood by a party and mistake or fraud is alleged, the obligation to show that the terms of the contract had been fully explained to said party who is unable to read or understand the language of the contract devolves on the party seeking to enforce it.

64. BAUTISTA vs. CA The deceased uncle of petitioner allegedly sold and conveyed to the latter a land during the uncle’s lifetime, as evidenced by a DEED OF ABSOLUTE SALE.

Respondent claiming to be the illegitimate child of the deceased instituted a complaint for the declaration of nullity of sale and title with damages. he presented testimonies of expert witnesses who claimed that the signature of Cesar Morelos on the Deed of Absolute Sale and the fingerprint appearing on his Residence Certificate were not his.

w/n the DEED of ABSOLUTE SALE was VALID. YES.

The presumption of validity and regularity prevails over allegations of forgery and fraud. As against direct evidence consisting of the testimony of a witness who was physically present at the signing of the contract and who had personal knowledge thereof, the testimony of an expert witness constitutes indirect or circumstantial evidence at best. Carmelita Marcelino, the witness to the Deed of Absolute Sale, confirmed the genuineness, authenticity and due execution thereof. Having been physically present to see the decedent Cesar Morelos and petitioner Laura Bautista affix their signatures on the document, the weight of evidence preponderates in favor of petitioners.

As to the alleged insufficient consideration of the sale of the property, the mere inadequacy of the price does not affect its validity when both parties are in a position to form an independent judgment concerning the transaction, unless fraud, mistake or undue influence indicative of a defect in consent is present. A contract may consequently be annulled on the ground of vitiated consent and not due to the inadequacy of the price. In the case at bar, however, no evidence to prove fraud, mistake or undue influence indicative of vitiated consent was presented other than the respondent's self-serving allegations.

65. DAUDEN-HERNAEZ vs. HON. WALFRIDO DE LOS ANGELES

Dauden-Hernaez, a motion picture actress, had filed a complaint against private respondents, to recover P14,700.00 representing a balance allegedly due said petitioner for her services as leading actress.

It was dismissed because the "claim of plaintiff was not evidenced by any written document, either public or private", and the complaint "was defective on its face" for violating Articles 1356 and 1358 of

To this general rule, the Code admits exceptions, set forth in Article 1356 (2).

It is thus seen that to the general rule that the form (oral or written) is irrelevant to the binding effect inter parties of a contract that possesses the three validating elements of consent, subject matter, and causa, Article 1356 of the Code establishes only two exceptions, to wit:

a. Contracts for which the law itself requires that they be in some

the Civil Code.

Complaint was amended. Defendant argued against it: amended complaint did not vary in any material respect from the original complaint except in minor details, and suffers from the same vital defect of the original complaint", which is the violation of Article 1356 of the Civil Code, in that the contract sued upon was not alleged to be in writing; that by Article 1358 the writing was absolute and indispensable, because the amount involved exceeds five hundred pesos.

W/N the contract for personal services involving more than P500.00 was either invalid of unenforceable under Article 1358, last par.

NO. THERE WAS A VALID AND ENFORCEABLE CONTRACT EVEN IF THERE IS NO CONTRACT IN WRITING. Contracts are valid and binding from their perfection regardless of form whether they be oral or written. This is plain from Articles 1315 and 1356 of the present Civil Code.

The essential requisites of a contract are: (1) consent (2) proper subject matter, and (3) consideration or causa for the obligation assumed (Article 1318). So that once the three elements exist, the contract is generally valid and obligatory, regardless of the form, oral or written, in which they are couched.

particular form (writing) in order to make them valid and enforceable (the so-called solemn contracts). Of these the typical example is the donation of immovable property that the law (Article 749) requires to be embodied in a public instrument in order "that the donation may be valid", i.e., existing or binding. Other instances are the donation of movables worth more than P5,000.00 which must be in writing, "otherwise the donation shall be void" (Article 748); contracts to pay interest on loans (mutuum) that must be "expressly stipulated in writing" (Article 1956); and the agreements contemplated by Article 1744, 1773, 1874 and 2134 of the present Civil Code.

b. Contracts that the law requires to be proved by some writing (memorandum) of its terms, as in those covered by the old Statute of Frauds, now Article 1403(2) of the Civil Code. Their existence not being provable by mere oral testimony (unless wholly or partly executed), these contracts are exceptional in requiring a writing embodying the terms thereof for their enforceability by action in court.

The contract sued upon by petitioner herein (compensation for services) does not come under either exception. It is true that it appears included in Article 1358, last clause, providing that "all other contracts where the amount involved exceeds five hundred pesos must appear in writing, even a private one." But Article 1358 nowhere provides that the absence of written form in this case will make the agreement invalid or unenforceable. On the contrary, Article 1357 clearly indicates that contracts covered by Article 1358 are binding and enforceable by action or suit despite the absence of writing.

66. CLAUDEL v. CA A lot was being claimed by two sets of heirs—Heirs of Cecilio Claudel (wife and children) and Siblings of Cecilio who claimed that several portions of the subject Lot had been purchased by their parents from the deceased about 46 years earlier. The sale was VERBAL.

W/N the ORAL sale was valid. NO.

Rule of thumb: a sale of land, once consummated, is valid regardless of the form it may have been entered into. For nowhere does law or jurisprudence prescribe that the contract of sale be put in writing before such contract can validly cede or transmit rights over a certain real property between the parties themselves.

However, in the event that a third party, as in this case, disputes the ownership of the property, the person against whom that claim is brought can not present any proof of such sale and hence has no means to enforce the contract. Thus the Statute of Frauds was precisely devised to protect the parties in a contract of sale of real property so that no such contract is enforceable unless certain requisites, for purposes of proof, are met.

The purpose of the Statute of Frauds is to prevent fraud and perjury in the enforcement of obligations depending for their evidence upon the unassisted memory of witnesses by requiring certain enumerated contracts and transactions to be evidenced in Writing.

67. BERMAN MEMORIAL PARK, INC and LUISA CHONG vs. FRANCISCO CHENG

Cheng purchased 2 memorial lots—Lot 12 which he upgraded to Lot 24. Cheng received a statement of account from BMPI showing that he still had a balance of P32,375.00. Cheng informed BMPI that he had, in fact, made an overpayment of P77,375.00 for the

Article 1370 of the New Civil Code provides that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall control. No amount of extrinsic aids are required and no further extraneous sources are necessary in order to ascertain the

two lots.

Chong/BMI: the price of 24-Lot was actually P350,000.00, but that the IMP had agreed to sell the lot to Cheng for P250,000.00, less P110,000.00 of theP150,000.00 price of 12-Lot in accordance w/their agreement.

How should the parties’ contract be interpreted?

parties’ intent, determinable as it is, from the contract itself. The records are clear that the respondent understood the nature of the contract he entered into.

If, indeed, the stipulations as embodied in the aforementioned Pre-Need Purchase Agreement were not the true intention of the parties, the respondent should have filed the corresponding action for reformation of the contract. But he did not.

The hornbook rule on interpretation of contracts gives primacy to the intention of the parties, which is the law among them. Ultimately, their intention is to be deciphered not from the unilateral post facto assertions of one of the parties, but from the language used in the contract. And when the terms of the agreement, as expressed in such language, are clear, they are to be understood literally, just as they appear on the face of the contract.