VICES OF CAPACITY

CATALN v. BASA
GR. NO. 159567 JULY 31, 2007

FACTS:

On October 20, 1948, FELICIANO CATALAN Feliciano was discharged from active
military service. The Board of Medical Officers of the Department of Veteran Affairs found that
he was unfit to render military service due to his schizophrenic reaction, catatonic type, which
incapacitates him because of flattening of mood and affect, preoccupation with worries,
withdrawal, and sparse and pointless speech.
On September 28, 1949, Feliciano married Corazon Cerezo. On June 16, 1951, a
document was executed, titled Absolute Deed of Donation, wherein Feliciano allegedly
donated to his sister MERCEDES CATALAN one-half of the real property.

On December 11, 1953, Peoples Bank and Trust Company filed a Special Proceedings
before the Court of First Instance to declare Feliciano incompetent. On December 22, 1953, the
trial court issued its Order for Adjudication of Incompetency for Appointing Guardian for the
Estate and Fixing Allowance of Feliciano. The following day, the trial court appointed Peoples
Bank and Trust Company as Felicianos guardian. On November 22, 1978, Feliciano and
Corazon Cerezo donated Lots 1 and 3 of their property, registered under Original Certificate of
Title (OCT) No. 18920, to their son Eulogio Catalan.

Mercedes sold the property in issue in favor of her children Delia and Jesus Basa. The
Deed of Absolute Sale was registered with the Register of Deeds and a Tax Declaration was
issued in the name of respondents.Feliciano and Corazon Cerezo donated Lot 2 of the
aforementioned property registered under OCT No. 18920 to their children Alex Catalan,
Librada Catalan and Zenaida Catalan. On February 14, 1983, Feliciano and Corazon Cerezo
donated Lot 4 (Plan Psu-215956) of the same OCT No. 18920 to Eulogio and Florida Catalan.

BPI, acting as Felicianos guardian, filed a case for Declaration of Nullity of Documents,
Recovery of Possession and Ownership, as well as damages against the herein respondents. BPI
alleged that the Deed of Absolute Donation to Mercedes was void ab initio, as Feliciano never
donated the property to Mercedes. In addition, BPI averred that even if Feliciano had truly
intended to give the property to her, the donation would still be void, as he was not of sound
mind and was therefore incapable of giving valid consent. Thus, it claimed that if the Deed of
Absolute Donation was void ab initio, the subsequent Deed of Absolute Sale to Delia and Jesus
Basa should likewise be nullified, for Mercedes Catalan had no right to sell the property to
anyone. BPI raised doubts about the authenticity of the deed of sale, saying that its registration
long after the death of Mercedes Catalan indicated fraud. Thus, BPI sought remuneration for
incurred damages and litigation expenses.

On August 14, 1997, Feliciano passed away. The original complaint was amended to
substitute his heirs in lieu of BPI as complainants in Civil Case No. 17666.The trial court found
that the evidence presented by the complainants was insufficient to overcome the presumption
that Feliciano was sane and competent at the time he executed the deed of donation in favor of
Mercedes Catalan. Thus, the court declared, the presumption of sanity or competency not having
been duly impugned, the presumption of due execution of the donation in question must be
upheld. The Court of Appeals upheld the trial courts decision.

ISSUE:

Whether said decision of the lower courts is correct.

RULING:

Petitioners questioned Felicianos capacity at the time he donated the property, yet did
not see fit to question his mental competence when he entered into a contract of marriage with
Corazon Cerezo or when he executed deeds of donation of his other properties in their favor.
The presumption that Feliciano remained competent to execute contracts, despite his illness, is
bolstered by the existence of these other contracts. Competency and freedom from undue
influence, shown to have existed in the other acts done or contracts executed, are presumed to
continue until the contrary is shown.

Needless to state, since the donation was valid, Mercedes had the right to sell the
property to whomever she chose. Not a shred of evidence has been presented to prove the claim
that Mercedes sale of the property to her children was tainted with fraud or falsehood. It is of
little bearing that the Deed of Sale was registered only after the death of Mercedes. What is
material is that the sale of the property to Delia and Jesus Basa was legal and binding at the time
of its execution. Thus, the property in question belongs to Delia and Jesus Basa.

The petitioners raised the issue of prescription and laches for the first time on appeal
before this Court. It is sufficient for this Court to note that even if the present appeal had
prospered, the Deed of Donation was still a voidable, not a void, contract. As such, it remained
binding as it was not annulled in a proper action in court within four years.
 DOMINGO V. COURT OF APPEALS
G.R. No. 127540. October 17, 2001

FACTS:

Paulina Rigonan owned three parcels of land including the house and warehouse on one
parcel. She allegedly sold them to private respondents, the spouses Felipe and Concepcion
Rigonan, who claim to be her relatives. In 1966, petitioners who claim to be her closest
surviving relatives, allegedly took possession of the properties by means of stealth, force and
intimidation, and refused to vacate the same. According to defendants, the alleged deed of
absolute sale was void for being spurious as well as lacking consideration. They said that
Paulina Rigonan did not sell her properties to anyone. As her nearest surviving kin within the
fifth degree of consanguinity, they inherited the three lots and the permanent improvements
thereon when Paulina died. They said they had been in possession of the contested properties for
more than 10 years.

ISSUE:

1.) Whether or not the consideration in Deed of Sale can be used to impugn the validity
of the Contract of Sale.
2.) Whether or not the alleged Deed of Sale executed by Paulina Rigonan in favor of the
private respondents is valid.

RULING:

1.) Consideration is the why of a contract, the essential reason which moves the
contracting parties to enter into the contract. The Court had seen no apparent and compelling
reason for her to sell the subject 9 parcels of land with a house and warehouse at a meager price
of P850 only. On record, there is unrebutted testimony that Paulina as landowner was financially
well off. She loaned money to several people. Undisputably, the P850.00 consideration for the
nine (9) parcels of land including the house and bodega is grossly and shockingly inadequate,
and the sale is null and void ab initio.

2.) The Court ruled in the negative. Private respondents presented only a carbon copy of
this deed. When the Register of Deeds was subpoenaed to produce the deed, no original
typewritten deed but only a carbon copy was presented to the trial court. None of the witnesses
directly testified to prove positively and convincingly Paulinas execution of the original deed of
sale. The carbon copy did not bear her signature, but only her alleged thumbprint. Juan Franco
testified during the direct examination that he was an instrumental witness to the deed.
However, when cross-examined and shown a copy of the subject deed, he retracted and said that
said deed of sale was not the document he signed as witness.
 HEIRS OF WILLIAM SEVILLA v. LEOPOLDO SEVILLA, ET AL.,
G.R. No. 150179. April 30, 2003

FACTS:

The undisputed facts reveal that on December 10, 1973, Filomena Almirol de Sevilla died
intestate leaving 8 children, namely: William, Peter, Leopoldo, Felipe, Rosa, Maria, Luzvilla,
and Jimmy, all surnamed Sevilla. William, Jimmy and Maria are now deceased and are survived
by their respective spouses and children. Filomena Almirol de Sevilla left several properties.
During the lifetime of Felisa and Honorata Almirol, they lived in the house of Filomena Almirol
de Sevilla, together with their nephew, respondent Leopoldo Sevilla and his family. Leopoldo
attended to the needs of his mother, Filomena, and his two aunts, Honorata and Felisa.
Felisa died on July 6, 1988. Previous thereto, on November 25, 1985, she executed a last
will and testament devising her 1/2 share in Lot No. 653 to the spouses Leopoldo Sevilla and
Belen Leyson On August 8, 1986, Felisa executed another document denominated as Donation
Inter Vivos ceding to Leopoldo Sevilla her 1/2 undivided share in Lot No. 653, which was
accepted by Leopoldo in the same document.
On September 3, 1986, Felisa Almirol and Peter Sevilla, in his own behalf and in behalf of
the heirs of Filomena Almirol de Sevilla, executed a Deed of Extra-judicial Partition, identifying
and adjudicating the 1/3 share of Honorata Almirol to the heirs of Filomena Almirol de Sevilla
and to Felisa Almirol.
Thereafter, respondents Leopoldo, Peter and Luzvilla Sevilla obtained the cancellation of
Transfer Certificate of Title No. (T-6671)-1448, over Lot No. 653, and the issuance of the
corresponding titles to Felisa Almirol and the heirs of Filomena Almirol de Sevilla. However, the
requested titles for Lot Nos. 653-A and 653-B, were left unsigned by the Register of Deeds of
Dipolog City, pending submission by Peter Sevilla of a Special Power of Attorney authorizing
him to represent the other heirs of Filomena Almirol de Sevilla
On June 21, 1990, Felipe Sevilla, Rosa Sevilla, and the heirs of William, Jimmy and Maria,
all surnamed Sevilla, filed the instant case against respondents Leopoldo Sevilla, Peter Sevilla
and Luzvilla Sevilla, for annulment of the Deed of Donation and the Deed of Extrajudicial
Partition, Accounting, Damages, with prayer for Receivership and for Partition of the properties
of the late Filomena Almirol de Sevilla.[14] They alleged that the Deed of Donation is tainted
with fraud because Felisa Almirol, who was then 81 years of age, was seriously ill and of
unsound mind at the time of the execution thereof; and that the Deed of Extra-judicial Partition is
void because it was executed without their knowledge and consent.

ISSUE:
Whether or not Felisa Almirol Sevilla had the legal capacity and was of sound mind
when the deed of donation was executed
HELD:
There is fraud when, through the 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. There is undue influence when a person takes improper advantage of his power over
the will of another, depriving the latter of a reasonable freedom of choice. The following
circumstances shall be considered: the confidential, family, spiritual and other relations between
the parties, or the fact that the person alleged to have been unduly influenced was suffering from
mental weakness, or was ignorant or in financial distress.
Clearly, therefore, the courts below did not err in sustaining the validity of the deed of
donation.
In the case at bar, at the time Felisa executed the deed of extra-judicial partition dividing the
share of her deceased sister Honarata between her and the heirs of Filomena Almirol de Sevilla,
she was no longer the owner of the 1/2 undivided portion of Lot No. 653, having previously
donated the same to respondent Leopoldo Sevilla who accepted the donation in the same deed. A
donation inter vivos, as in the instant case, is immediately operative and final]As a mode of
acquiring ownership, it results in an effective transfer of title over the property from the donor to
the donee and the donation is perfected from the moment the donor knows of the acceptance by
the donee. And once a donation is accepted, the donee becomes the absolute owner of the
property donated.
Evidently, Felisa did not possess the capacity to give consent to or execute the deed of
partition inasmuch as she was neither the owner nor the authorized representative of respondent
Leopoldo to whom she previously transmitted ownership of her undivided share in Lot No.
653. Considering that she had no legal capacity to give consent to the deed of partition, it follows
that there is no consent given to the execution of the deed, and therefore, there is no contract to
speak of. As such, the deed of partition is void ab initio, hence, not susceptible of ratification.
Nevertheless, the nullity of the deed of extra-judicial partition will not affect the validity of
the donation inter vivos ceding to respondent Leopoldo Sevilla the 1/2 undivided share of Felisa
Almirol in Lot No. 653. Said lot should therefore be divided as follows: 1/2 shall go to
respondent Leopoldo Sevilla by virtue of the deed of donation, while the other half shall be
divided equally among the heirs of Filomena Almirol de Sevilla including Leopoldo Sevilla,
following the rules on intestate succession.
 MENDOZANA, ET AL. V. OZAMIZ ET AL.
G.R. No. 143370, February 6, 2002

FACTS:

Petitioner spouses Mario J. Mendezona and Teresita M. Mendezona, petitioner spouses Luis
J. Mendezona and Maricar L. Mendezona, and petitioner Teresita Adad Vda. de Mendezona own a
parcel of land each with almost similar areas of 3,462 square meters, 3,466 square meters and 3,468
square meters. The petitioners ultimately traced their titles of ownership over their respective
properties from a notarized Deed of Absolute Sale executed in their favor by Carmen Ozamiz. The
petitioners initiated the suit to remove a cloud on their said respective titles caused by the inscription
thereon. The respondents opposed the petitioners claim of ownership of the said parcels of land
alleging that the titles issued in the petitioners names are defective and illegal, and the ownership of
the said property was acquired in bad faith and without value inasmuch as the consideration for the
sale is grossly inadequate and unconscionable. Respondents further alleged that at the time of the
sale as alleged, Carmen Ozamiz was already ailing and not in full possession of her mental faculties;
and that her properties having been placed in administration, she was in effect incapacitated to
contract with petitioners. They argue that the Deed of Absolute sale is a simulated contract.

ISSUE:

Whether or not the Deed of Absolute Sale in the case at bar was simulated.

RULING:

The Court ruled that the Deed in the case at bar is not a simulated contract. Simulation is
defined as the declaration of a fictitious will, deliberately made by agreement of the parties, in order
to produce, for the purposes of deception, the appearances of a juridical act which does not exist or
is different from what that which was really executed. The requisites of simulation are:
(a) an outward declaration of will different from the will of the parties; (b) the false appearance
must have been intended by mutual agreement; and (c) the purpose is to deceive third persons.
None of these were clearly shown to exist in the case at bar. The Deed of Absolute Sale is a
notarized document duly acknowledged before a notary public. As such, it has in its favor the
presumption of regularity, and it carries the evidentiary weight conferred upon it with respect to its
due execution. It is admissible in evidence without further proof of its authenticity and is entitled to
full faith and credit upon its face. The burden fell upon the respondents to prove their allegations
attacking the validity and due execution of the said Deed of Absolute Sale. Respondents failed to
discharge that burden; hence, the presumption in favor of the said deed stands.
 LIM VS. COURT OF APPEALS
G.R. No. 55201, February 3, 1994

FACTS:

The deceased spouses Tan Quico and Josefa Oraa, who both died intestate left 96
hectares of land. The late spouses were survived by four children; Cresencia, Lorenzo,
Hermogenes and Elias. Elias died on May 2, 1935. Cresencia died on December 20, 1967. She
was survived by her husband, Lim Chay Sing, and children, Mariano, Jaime, Jose Jovita,
Anacoreta, Antonietta, Ruben, Benjamin and Rogelio who are now the petitioners in the case at
bench.
The Cresencia only reached the second grade of elementary school. She could not read or
write in English. On the other hand, Lorenzo is a lawyer and a CPA. Heirs of Cresencia alleged
that since the demise of the spouses Tan Quico and Josefa Oraa, the subject properties had been
administered by respondent Lorenzo. They claimed that before her death, Cresencia had
demanded their partition from Lorenzo. After Cresencias death, they likewise clamored for their
partition. Their effort proved fruitless.
Respondents Lorenzo and Hermogenes unyielding stance against partition is based on
various contentions. They cited as evidence the Deed of Confirmation of Extra Judicial
Settlement of the Estate of Tan Quico and Josefa Oraa and a receipt of payment. Principally,
they urge that the properties had already been partitioned, albeit, orally; and during her lifetime,
the late Cresencia had sold and conveyed all her interests in said properties to respondent
Lorenzo.

ISSUE:

Whether or not there is error or mistake in the signing of the Deed.

HELD:

There is an error in the signing of the Deed.

Article 1332 of the Civil Code provides: 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.
In the case at bar, the questioned Deed is written in English, a language not understood
by Cresencia an illiterate in the said language. It was prepared by the respondent Lorenzo, a
lawyer and CPA. Lorenzo did not cause the notarization of the Deed. Considering these
circumstances, the burden was on private respondents to prove that the content of the Deed was
explained to the illiterate Cresencia before she signed it. In this regard, the evidence adduced by
the respondents failed to discharge their burden.
This substantive law came into being due to the finding of the Code Commission that
there is still a fairly large number of illiterates in this country, and documents are usually drawn
up in English or Spanish. It is also in accord with our state policy of promoting social justice. It
also supplements Article 24 of the Civil Code which calls on court to be vigilant in the protection
of the rights of those who are disadvantaged in life.
 RUIZ VS. COURT OF APPEALS
G.R. NO. 146942 APRIL 22, 2003

FACTS:

Petitioner Corazon Ruiz is engaged in the business of buying and selling jewelry. She
obtained loans from private respondent Consuelo Torres on different occasions and in different
amounts. Prior to their maturity, the loans were consolidated under 1 promissory note dated
March 22, 1995.The consolidated loan of P750, 000.00 was secured by a real estate mortgage on
a lot in Quezon City, covered by Transfer of Certificate of Title No. RT-96686, and registered in
the name of petitioner. The mortgage was signed by petitioner for herself and as attorney-in-fact
of her husband Rogelio. It was executed on 20 March 1995, or 2 days before the execution of the
subject promissory note.

Thereafter, petitioner obtained 3 more loans from private respondent, under the following
promissory notes: 1) promissory note dated 21 April 1995, in the amount of P100,000.00; 2)
promissory note dated 23 May !995 in the amount of P100,000.00, and 3) promissory note dated
21 December 1995, in the amount of P100,000.00. These combined loans of P300,000.00 were
secured by P571,000.00 worth of jewelry pledged by petitioner to private respondent.

From April 1995 to March 1996, petitioner paid the stipulated 3% monthly interest on the
P750,000.00 loan, amounting to P270,000. After March 1996, petitioner was unable to make
interest payments as she had difficulties collecting from her clients in her jewelry business.

Because of petitioners failure to pay the principal loan of P750,000.00, as well as the
interest payment for April 1996, private respondent demanded payment not only of the
P750,000.00 loan but also of the P300,000.00 loan. When petitioner failed to pay, private
respondent sought the extrajudicial foreclosure of the aforementioned real estate mortgage.

ISSUE:
Whether or not there is undue influence in the signing of the promissory note, which
determines if foreclosure proceedings could proceed.

HELD:

The promissory note in question did not contain any fine print provision which could
have escaped the attention of the petitioner. Petitioner had all the time to go over and study the
stipulations embodied in the promissory note. Aside from the March 22, 1995 promissory note
for P750,000.00, three other promissory notes of different dates and amounts were executed by
petitioner in favor of private respondent. These promissory notes contain similar terms and
conditions, with a little variance in the terms of interests and surcharges. The fact that petitioner
and private respondent had entered into not only one but several loan transactions shows that
petitioner was not in any way compelled to accept the terms allegedly imposed by private
respondent. Moreover, petitioner, in her complaint dated October 7, 1996 filed with the trial
court, never claimed that she was forced to sign the subject note. Therefore, the foreclosure
proceedings may now proceed.
 EPIFANIA DELA CRUZ, v. SPS. EDUARDO C. SISON and EUFEMIA S. SISON
G.R. No. 163770 February 17, 2005

FACTS:
Initially, the complainant in this case was Epifania S. Dela Cruz (Epifania), but she died
on November 1, 1996, while the case was pending in the Court of Appeals. Upon her demise,
she was substituted by her niece, Laureana V. Alberto.
Epifania claimed that sometime in 1992, she discovered that her rice land in Salomague
Sur, Bugallon, Pangasinan, has been transferred and registered in the name of her nephew,
Eduardo C. Sison, without her knowledge and consent, purportedly on the strength of a Deed of
Sale she executed on November 24, 1989.
Epifania thus filed a complaint before the Regional Trial Court of Lingayen, Pangasinan,
to declare the deed of sale null and void. She alleged that Eduardo tricked her into signing the
Deed of Sale, by inserting the deed among the documents she signed pertaining to the transfer of
her residential land, house and camarin, in favor of Demetrio, her foster child and the brother of
Eduardo.
Respondents, spouses Eduardo and Eufemia Sison (Spouses Sison), denied that they
employed fraud or trickery in the execution of the Deed of Sale. They claimed that they
purchased the property from Epifania for P20,000.00. They averred that Epifania could not have
been deceived into signing the Deed of Absolute Sale because it was duly notarized before
Notary Public Maximo V. Cuesta, Jr.; and they have complied with all requisites for its
registration, as evidenced by the Investigation Report by the Department of Agrarian Reform
(DAR), Affidavit of Seller/Transferor, Affidavit of Buyer/Transferee, Certification issued by the
Provincial Agrarian Reform Officer (PARO), Letter for the Secretary of Agrarian Reform,
Certificate Authorizing Payment of Capital Gains Tax, and the payment of the registration fees.
Some of these documents even bore the signature of Epifania, proof that she agreed to the
transfer of the property.

ISSUES:
Whether the deed of absolute sale is valid
Whether fraud attended the execution of a contract

HELD:
On the issue of whether fraud attended the execution of a contract is factual in nature.
Normally, this Court is bound by the appellate courts findings, unless they are contrary to those
of the trial court, in which case we may wade into the factual dispute to settle it with finality.
After a careful perusal of the records, we sustain the Court of Appeals ruling that the Deed of
Absolute Sale dated November 24, 1989 is valid.
There being no evidence adduced to support her bare allegations, thus, Epifania failed to
satisfactorily establish her inability to read and understand the English language.
 Although Epifania was 79 years old at the time of the execution of the assailed contract,
her age did not impair her mental faculties as to prevent her from properly and intelligently
protecting her rights. Even at 83 years, she exhibited mental astuteness when she testified in
court. It is, therefore, inconceivable for her to sign the assailed documents without ascertaining
their contents, especially if, as she alleges, she did not direct Eduardo to prepare the same.

A comparison of the deed of sale in favor of Demetrio and the deed of sale in favor
Eduardo, draws out the conclusion that there was no trickery employed. One can readily see that
the first deed of sale is in all significant respects different from the second deed of sale. A casual
perusal, even by someone as old as Epifania, would enable one to easily spot the differences.
Epifania could not have failed to miss them.
Indeed, if the intention was to deceive, both deeds of sale should have been mirror
images as to mislead Epifania into thinking that she was signing what appeared to be the same
document.
In addition, the questioned deed of sale was duly notarized. It is a settled rule that one
who denies the due execution of a deed where ones signature appears has the burden of proving
that, contrary to the recital in the jurat, one never appeared before the notary public and
acknowledged the deed to be a voluntary act. Epifania never claimed her signatures as forgeries.
In fact, Epifania never questioned the deed of sale in favor of Demetrio, accepting it as a valid
and binding document. It is only with respect to the deed of sale in favor of Eduardo that she
denies knowledge of affixing her signature. Unfortunately, for both parties, the notary public,
Atty. Maximo V. Cuesta, Jr. before whom they appeared, died prior to the filing of the case.
 RURAL BANK OF ST. MARIA, PANGASINAN V. COURT OF APPEALS
G.R. No. 110672. September 14, 1999

FACTS:

Real Estate Mortgage as a security for loans obtained amounting to P156 270 was
executed by Manuel Behis on a land in favor of Rural Bank of St. Maria, Pangasinan. But
Manuel, being a delinquent, sold the land, evidenced by a Deed of Absolute Sale with
Assumption of Mortgage to Rayandayan and Arceo for the sum of P250 000. On the same day,
Rayandayan and Arceo, together with Manual Behis executed another Agreement embodying
the consideration of the sale of the land in the sum of P2.4 million. The land, however, remained
in the name of Behis because the former did not present to the Register of Deeds the contracts.
Rayandaran and Arceo presented the Deed of Absolute Sale to the bank and negotiated
with the principal stockholder of the bank for the assumption of the indebtedness of Manuel
Behis and the subsequent release of the mortgage on the property by the bank. Rayandaran and
Arceo did not show to the bank the agreement with Manuel Behis providing for the real
consideration of P2.4 million. Subsequently, the bank consented to the substitution of plaintiffs
as mortgage debtors in place of Manuel Behis in a Memorandum of Agreement between private
respondents and the bank with restricted and liberalized terms for the payment of the mortgage
debt including the initial payment of P143 782.22.
Due to the appearance of Christina Behis, Manuels wife and a co-signatory in the
mortgaged land alleging that her signature in the deed of sale was forged, the bank discontinued
to comply with the Memorandum of Agreement considering it to be void.
In a letter, plaintiffs demanded that the bank comply with its obligation under the
Memorandum of Agreement to which the latter denied. Petitioner bank argued that the
Memorandum of Agreement is voidable on the ground that its consent to enter said agreement
was vitiated by fraud because private respondents withheld from petitioner bank the material
information that the real consideration for the sale with assumption of mortgage of the property
by Manuel Behis to Rayandayan and Arceo is P2,400,000.00, and not P250,000.00 as
represented to petitioner bank. According to petitioner bank, had it known for the real
consideration for the sale, i.e. P2.4 million, it would not have consented into entering the
Memorandum of Agreement with Rayandayan and Arceo as it was put in the dark as to the real
capacity and financial standing of private respondents to assume the mortgage from Manuel
Behis.

ISSUE:

Whether or not there existed a fraud in the case at bar

HELD:

The Court ruled that there was no fraud in the case at bar. It is believed that the non-
disclosure to the bank of the purchase price of the sale of the land between private respondents
and Manuel Behis cannot be the fraud contemplated by Article 1338 of the Civil Code.
 The kind of fraud that will vitiate a contract refers to those insidious words or
machinations resorted to by one of the contracting parties to induce to the other to enter into a
contract which without them he would not have agreed to. Simply stated, the fraud must be
determining cause of the contract, or must have caused the consent to be given.
Pursuant to Art. 1339 of the Code, silence or concealment, by itself, does not constitute
fraud unless there is a special duty to disclose certain facts. In the case at bar, private
respondents had no duty to do such.
From the sole reason submitted by the petitioner bank that it was kept in the dark as to the
financial capacity of private respondents, the Court cannot see how the omission or concealment
of the real purchase price could have induced the bank into giving its consent to the agreement;
or that the bank would not have otherwise given its consent had it known of the real purchase
price.
 OBJECT OR SUBJECT MATTER
CARABEO v. DINGCO
G.R. No. 190823, April 04, 2011

FACTS:

On July 10, 1990, Domingo Carabeo (petitioner) entered into a contract denominated as
"Kasunduan sa Bilihan ng Karapatan sa Lupa" with Spouses Norberto and Susan Dingco
(respondents) whereby petitioner agreed to sell his rights over a 648 square meter parcel of
unregistered land situated in Purok III, Tugatog, Orani, Bataan to respondents for P38,000.
Respondents tendered their initial payment of P10,000 upon signing of the contract, the
remaining balance to be paid on September 1990. Respondents were later to claim that when
they were about to hand in the balance of the purchase price, petitioner requested them to keep it
first as he was yet to settle an on-going "squabble" over the land. Sometime in 1994, respondents
learned that the alleged problem over the land had been settled and that petitioner had caused its
registration in his name on December 21, 1993 under Transfer Certificate of Title No. 161806.
They thereupon offered to pay the balance but petitioner declined, drawing them to file a
complaint before the Katarungan Pambarangay. No settlement was reached, however, hence,
respondent filed a complaint for specific performance before the Regional Trial Court (RTC) of
Balanga, Bataan.
The trial court ruled in favor of respondents. CA affirmed RTC. Hence this petition.

ISSUE:

Whether or not the CA erred in their decision by favoring respondents

RULING:

The Supreme Court denied the petition. The court contends that the KASUNDUAN
which pertinent portion reads Na ako ay may isang partial na lupa na matatagpuan sa Purok
111, Tugatog, Orani Bataan, na may sukat na 27 x 24 metro kuwadrado, ang nasabing lupa ay
may sakop na dalawang punong santol at isang punong mangga, kaya't ako ay nakipagkasundo
sa mag-asawang Norby Dingco at Susan Dingco na ipagbili sa kanila ang karapatan ng nasabing
lupa sa halagang P38,000.00, That the kasunduan did not specify the technical boundaries of the
property did not render the sale a nullity. The requirement that a sale must have for its object a
determinate thing is satisfied as long as, at the time the contract is entered into, the object of the
sale is capable of being made determinate without the necessity of a new or further agreement
between the parties. As the above-quoted portion of the kasunduan shows, there is no doubt that
the object of the sale is determinate. In the present case, respondents are pursuing a property
right arising from the kasunduan, whereas petitioner is invoking nullity of the kasunduan to
protect his proprietary interest. Assuming arguendo, however, that the kasunduan is deemed
void, there is a corollary obligation of petitioner to return the money paid by respondents, and
since the action involves property rights. The death of a client immediately divests the counsel of
authority. Thus, in filing a Notice of Appeal, petitioner's counsel of record had no personality to
act on behalf of the already deceased client who, it bears reiteration, had not been substituted as a
party after his death.
 CHAVEZ v. PUBLIC ESTATES AUTHORITY
G.R. No. 133250, 9 July 2002

FACTS:

The Senate Blue Ribbon Committee and Committee on Accountability of Public Officers
conducted public hearings to determine the actual market value of the public lands along Roxas
Boulevard under controversy. The investigation found out that the sale of such was lands grossly
undervalued based on official documents submitted by the proper government agencies during
the investigations. It was found out that the Public Estates Authority, under the Joint Venture
Agreement, sold it to Amari Coastal Bay Development Corporation 157.84 hectares of reclaimed
public lands totaling to P 1.89 B or P 1,200 per square meter. However during the investigation
process, the BIR pitted the value at P 7,800 per square meter, while the Municipal Assessor of
Paraaque at P 6,000 per square meter and by the Commission on Audit (COA) at P21,333 per
square meter. Based on the official appraisal of the COA, the actual loss on the part of the
government is a gargantuan value of P 31.78 B. However, PEA justified the purchase price based
from the various appraisals of private real estate corporations, amounting from P 500 1,000 per
square meter. Further, it was also found out that there were various offers from different private
entities to buy the reclaimed public land at a rate higher than the offer of Amari, but still, PEA
finalized the JVA with Amari. During the process of investigation, Amari did not hide the fact
that they agreed to pay huge commissions and bonuses to various persons for professional efforts
and services in successfully negotiating and securing for Amari the JVA. The amount
constituting the commissions and bonuses totaled to a huge P 1.76 B; an indicia of great bribery.

ISSUE:

Whether or not the sale of public lands between PEA and Amari is constitutional

RULING:

The Court found that the sale is unconstitutional, because what was sold or alienated are
lands of the public domain. Taking the fact the sold parcel of land is submerged land is
inalienable. As unequivocally stated in Article XII, Section 2 of the Constitution, all lands of the
public domain, waters, minerals, coals, petroleum, forces which are potential energies, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources, with the exception of
agricultural lands, are inalienable. Submerged lands fall within the scope of such provision.
Ergo, the submerged lands, being inalienable and outside the commerce of man, could
not be the subject of the commercial transactions specified in the Amended JVA. Hence, the
contract between Amari and the PEA is void.