Cause of Contracts to Interpretation of Contracts  Salvador was not moved solely by the desire to benefit Conchita, but also

oved solely by the desire to benefit Conchita, but also to secure

her cohabiting with him, and so that he could satisfy his sexual impulses. Thus,
Liquez v CA donation is indeed predicted on an illegal causa.
 However, A donation with illegal causa may produce effects under certain
Facts:
circumstances where the parties are not of equal guilt. In this case, it cannot
be said that both parties had equal guilt as it is more of a case of seduction than
 Conchita Liguez filed a complaint against the widow and heirs of Salvador Lopez to
that of immoral bargaining.
recover a parcel of land. She claims to be the legal owner of the land pursuant to a
2. NO.
deed of donation executed in her favor by the late owner, Salvador P. Lopez, on 18
 In pari delicto ruled does not apply since at the time of the donation, Salvador was
May 1943. The said land however, actually belongs to the conjugal partnership of
a man advanced in years and Conchita was only 16.
Salvador and his wife.
 Conchita was also not fully aware of the terms of the bargain entered into by her
 Conchita was only 16 years old when the donation was executed.
parents, and her acceptance of the deed does not imply knowledge of conditions
 The Deed of Donation recites “That the DONOR, Salvador P. Lopez, for and in
and terms not set forth therein.
consideration of his love and affection for the said DONEE, Conchita Liguez, and
 Witnesses testified that it was Conchita’s parents who insisted on the donation.
also for the good and valuable services rendered to the DONOR by the DONEE,
does by these presents, voluntarily give, grant and donate to the said donee, etc."  Conchita is seeking to recover the land based on the strength of a donation on its
regular face. To defeat its effect, the heirs must plead and prove that it is illegal,
 The defense interposed was that the donation was null and void for having an
which they cannot do since Salvador himself, if living would be barred from setting
illicit causa or consideration, which was plaintiff's entering into marital relations
up that plea.
with Salvador P. Lopez, a married man; and that the property had been
adjudicated to the appellees as heirs of Lopez by the Court of First Instance, since
SC: Conchita Liguez is declared entitled to so much of the donated property as may be
1949.
found, upon proper liquidation, not to prejudice the share of the widow Maria Ngo in the
 The CA ruled that the donation was null and void because it was a conjugal
conjugal partnership with Salvador P. Lopez or the legitimes of the forced heirs of the latter.
property which Lopez had no right to donate and that the donation was tainted
with illegal causa or consideration. The CA also rejected the claim based on the
in pari delicto rule.

Issue:

1. WON the donation is null and void as it is tainted with illegal causa or
consideration.
2. WON in pari delicto is applicable.

Ruling:

1. YES but not in its entirety.

 Under Article 1274, liberality of the donor is deemed causa only in those contracts
that are of "pure" beneficence; that is to say, contracts designed solely and
exclusively to procure the welfare of the beneficiary, without any intent of
producing any satisfaction for the donor; contracts, in other words, in which the
idea of self-interest is totally absent on the part of the transferor.

ObliCon – Jan 30, 2018 Page 1

Carantes vs CA, et. Al Issue:

Facts: WON contract is invalid due to lesion or inadequacy of cause.

Mateo Carantes was the original owner of a land in Baguio City, who later died survived by
his widow Ogasia and six children, a portion of the land was needed for the construction of
the Loakan Airport which the government instituted expropriation proceedings. The lot was
Ruling:
subdivided and the portion expropriated was Lot No. 44-A.

Maximino Carrantes was appointed the judicial administrator of the estate of Mateo. NO.
A deed of denominated “Assignment of Right to Inheritance” was executed by four of
Mateo’s children, and the heirs of Apung Carantes, assigning to Maximino Carantes their It is total absence of cause or consideration that renders a contract absolutely void and
rights to the inheritance of the land. The stated monetary consideration for the assignment inexistent.
was P1.00.

The document contains a recital to the effect that the said lots, "by agreement of all the In the case at bar consideration was not absent. The sum of P1.00 appears in the document
direct heirs and heirs by representation of the deceased Mateo Carantes as expressed and as one of the considerations for the assignment of inheritance.
conveyed verbally by him during his lifetime, rightly and exclusively belong to the
particular heir, Maximino Carantes, now and in the past in the exclusive, continuous,
In addition — and this of great legal import — the document recites that the decedent
peaceful and notorious possession of the same for more than ten years."
Mateo Carantes had, during his lifetime, expressed to the signatories to the contract that the
Maximino registered the Assignment of Right to Inheritance and a transfer certificate of title property subject-matter thereof rightly and exclusively belonged to the petitioner
was issued in favor of Maximino. The title of the remaining lots (Lots 44-D and E) were Maximino Carantes.
issued in the name of Maximino as well.
This acknowledgment by the signatories definitely constitutes valuable consideration for
the contract.
A complaint was filed by three children of the late Mateo and by the surviving heirs of
Apung and Sianang, Complaints prayin that the deed of "Assignment of Right to Inheritance" Fraud or deceit does not render a contract void ab initio and can only be a ground for
be declared null and void. rendering the contract voidable or annullable pursuant to Art 1390 of the New Civil Code by
a proper action in court.
Complainants alleged that they were made to believe by the defendant Maximo that the said
instrument merely authorized Maximo to convey portions of Lot-44 to the government in
their behalf to minimize the expenses and facilitate the transaction.

They also alleged that real consent was wanting and the consideration of P1.00 is so
shocking to the conscience that there was in fact no consideration, hence, the action for the
declaration of the contract's inexistence does not prescribe pursuant to article 1410 of the
new Civil Code.

ObliCon – Jan 30, 2018 Page 2

Sps. Buenaventura et al. v CA

FACTS: ISSUES:

Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs (1) Whether the Deeds of Sale are void for lack of consideration
Consolacion, Nora, Emma and Natividad as well as of defendants Fidel, Tomas, Artemio,
Clarita, Felicitas, Fe, and Gavino, all surnamed JOAQUIN. (3) Whether the Deeds of Sale are void for gross inadequacy of price

Sought to be declared null and void ab initio, are certain deeds of sale of real property RULING:
executed by defendant parents Leonardo Joaquin and Feliciana Landrito in favor of their co-
defendant children.
(1) Article 1471 of the Civil Code states that if the price in a contract of sale is
simulated, the sale is void. It is not the act of payment of price that determines the validity
In their complaint, they aver that the deeds of sale are NULL AND VOID AB INITIO because of a contract of sale. Payment of the price has nothing to do with the perfection of the
contract. Payment of the price goes into the performance of the contract. Failure to pay the
a) Firstly, there was no actual valid consideration for the deeds of sale . . . over the consideration is different from lack of consideration. The former results in a right to
properties in litis; demand the fulfillment or cancellation of the obligation under an existing valid contract
while the latter prevents the existence of a valid contract.
b)Secondly, assuming that there was consideration in the sums reflected in the
questioned deeds, the properties are more than three-fold times more valuable than the Petitioners failed to show that the prices in the Deeds of Sale were
measly sums appearing therein; absolutely simulated. To prove simulation, petitioners presented Emma Joaquin Valdoz's
testimony stating that their father, respondent Leonardo Joaquin, told her that he would
c) Thirdly, the deeds of sale do not reflect and express the true intent of the parties transfer a lot to her through a deed of sale without need for her payment of the purchase
(vendors and vendees); and price. Petitioners' failure to prove absolute simulation of price is magnified by their lack of
knowledge of their respondent siblings' financial capacity to buy the questioned lots. On the
other hand, the Deeds of Sale which petitioners presented as evidence plainly showed the
d)Fourthly, the purported sale of the properties in litis was the result of a cost of each lot sold. Not only did respondents' minds meet as to the purchase price, but the
deliberate conspiracy designed to unjustly deprive the rest of the compulsory heirs real price was also stated in the Deeds of Sale. As of the filing of the complaint, respondent
(plaintiffs herein) of their legitime. siblings have also fully paid the price to their respondent father.

Defendants, on the other hand aver (2) Article 1355 of the Civil Code states: Except in cases specified by law, lesion or
inadequacy of cause shall not invalidate a contract, unless there has been fraud, mistake or
(1) that plaintiffs do not have a cause of action against them as well as the undue influence.
requisite standing and interest to assail their titles over the properties in litis;
Article 1470 of the Civil Code further provides: Gross inadequacy of price does not
(2) that the sales were with sufficient considerations and made by defendants affect a contract of sale, except as may indicate a defect in the consent, or that the
parents voluntarily, in good faith, and with full knowledge of the consequences of their parties really intended a donation or some other act or contract.
deeds of sale; and
Petitioners failed to prove any of the instances mentioned in Articles 1355 and
(3) that the certificates of title were issued with sufficient factual and legal basis. 1470 of the Civil Code which would invalidate, or even affect, the Deeds of Sale.

- TC ruled in favor of the defendants and dismissed the complaint. If there is meeting of the minds if the parties as to the price, the contract of sale is valid,
despite the manner of payment, or even the breach of the manner of payment.
- CA affirmed.

ObliCon – Jan 30, 2018 Page 3

If the real price is not stated in the contract, them the contract of sale is valid but subject to Hernaez vs. de los Angeles
reformation.
FACTS:
In the instant case, the trial court found that the lots were sold for a valid
consideration, and that the defendant children actually paid the purchase price stipulated in Petitioner, Marlene Dauden-Hernaez, a movie actress, filed a case against the
their respective Deeds of Sale. Court affirmed. President and General Manager of Hollywood Far East Productions, Ramon Valenzuela, to
recover P14,700 the balance due for her services as leading actress in two motion pictures.

Her complaint was dismissed by Judge De Los Angeles mainly because her claim was
not supported by a written document, public or private which violates Articles 1356 and
1358 of the Civil Code.

According to respondent Judge De Los Angeles, the contract sued upon was not in
writing, however, Article 1358 requires it to be so because the amount involved in such
agreement exceeds Php 500.

ISSUES:

WON a contract for personal services involving more than Php 500.00 was either
invalid or unenforceable under the last paragraph of Article 1358.

RULING:

No.

In general, contracts are valid and binding from their perfection regardless of whether
they are oral or written. However, as provided in the 2nd sentence of Art. 1356:
Contracts shall be obligatory in whatever form they may have been entered into,
provided all the essential requisites for their validity are present. However, when the law
requires that a contract be in some form in order that it may be valid or enforceable, or that a
contract be proved in a certain way, that requirement is absolute and indispensable.

The assailed contract is about compensation for services, which does not come under
the exception of contracts where form is irrelevant. While the last clause of Article 1358
provides that "all other contracts where the amount involved exceeds five hundred pesos
must appear in writing, even a private one." Said Article does not provide that the absence
of a 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.

The order which dismissed the complaint is now set aside. It is now remanded back to
the CFI for further proceedings.

ObliCon – Jan 30, 2018 Page 4

Garcia v Bisaya intention of the parties. (Art. 1359, new Civil Code) But the complaint does not even
allege what the real agreement or intention was.
In Reformation of contracts, Moreover, courts do not reform instruments merely for the sake of reforming them, but
allegation of the real agreement or intention of parties is essential since the object only to enable some party to assert right under them as reformed.
sought in an action for reformation is to make an instrument conform to the real
agreement or intention of the parties. If in the case he has been led to enter into the contract of sale through fraud or
misrepresentation in the mistaken belief that, as stated in the deed, the property he
FACTS: was buying was unregistered land, article 1359 of the new Civil Code expressly
Paulino Garcia filed a complaint against Bisaya in the CFI of Oriental Mindoro, alleging provides that "the proper remedy is not reformation of the instrument but
that on November 12, 1938, Bisaya executed in favor of Garcia a deed of sale covering a annulment of the contract." Appellant's complaint, however, does not ask for the
parcel of land therein described; annulment of the deed; neither does it contain allegations essential to an action for that
purpose.
1. that the said land "was erroneously designated by the parties in the deed
of sale as an unregistered land (not registered under Act 496, nor under Garcia’s complaint states no cause of action, for it fails to allege that the instrument to
the Spanish Mortgage Law) when in truth and in fact said land is a the reformed does not express the real agreement or intention of the parties.
portion of a big mass of land registered under Original Certificate of Title
No. 6579 in the Office of the Register of Deeds of Oriental Mindoro";
2. that despite persistent demand from Garcia to have the error corrected,
Bisaya refused to do so. Garcia, therefore, prayed for judgment ordering
defendants to make the aforesaid correction in the deed of sale.
Bisaya denied having executed the alleged deed of sale and pleaded prescription as a
defense.
Garcia alleged, among other things, that he "was without knowledge of the error sought
to be corrected at the time the deed of sale was executed and for many years, he was
able to discovered it recently.
The RTC dismissed the complaint for the action had already prescribed.
ISUUES:
WON, the petition must be dismissed due to prescription.
HELD:
Yes, it must be dismissed but not by reason of prescription. Both Garcia and Bisaya
apparently regard the present action as one for the reformation of an instrument under
Chapter 4, Title II, Book IV of the new Civil Code.
The action being upon a written contract, it should prescribe in ten years from the day
it could have been instituted.
There being nothing in the pleadings to show that the error was discovered more than
ten years before the present action was filed on May 20, 1952, as allegation that the
error was discovered "only recently", we think the action should not have been
dismissed as having already prescribed before the factual basis for prescription had
been established.
However, Garcia’s complaint states no cause of action, for it fails to allege that the
instrument to the reformed does not express the real agreement or intention of
the parties. Such allegation is essential since the object sought in an action for
reformation is to make an instrument conform to the real agreement or

ObliCon – Jan 30, 2018 Page 5

Bentir v Leande Atilano v Atilano

FACTS: Respondent Leyte Gulf Traders, Inc., (LGTI) entered into a Contract of Lease on a Facts:
parcel of land with petitioner Bentir for a period of 20 years starting on 1968 and to be
extended for additional 4 years or until 1992. On 1989, petitioner Bentir sold the leased  In 1916 Atilano I purchased from Gerardo Villanueva a lot No. 535 of the then
premises to spouses Pormida (also petitioners). Respondent LGTI questioned the sale Municipality of Zamboanga cadastre. Atilano I obtained the transfer certificate of
alleging that it has a right of first refusal. As such, it filed a case seeking for the reformation title (TCT) No. 1334 in his name.
of the expired contract of lease by claiming that its lawyers inadvertently omitted to  In 1920 he had the land subdivided into five parts. (535 A, B, C, and E)
incorporate in the contract of lease executed in 1968, the verbal agreement or  On May 18 of the same year, after the subdivision, Atilano I, executed a deed of
understanding between the parties that in the event petitioner Bentir leases or sells the lot sale covering lot No. 535-E for the sum of P150.00 in favor of his brother Eulogio
after the expiration of the lease, respondent corporation has the right to equal the highest Atilano II (Atilano II), who obtained a TCT in his name.
offer.  Three (3) [535-B, C, D) other portions were sold to other persons, the original
owner, Atilano I, retaining for himself only the remaining portion of the land,
Petitioners, on the other hand, alleged, among others, that the respondent corporation is presumably lot No. 535-A.
guilty of laches for not bringing the case for reformation of the lease contract within the  Upon his death, the title to his lot passed to Ladislao Atilano (Ladislao), defendant,
prescriptive period of 10 years from its execution, or in other words, the action has already in whose name the TCT No. T-5056 was issued.
prescribed.  December 6, 1952, after Atilano II’s wife Luisa Bautista death, he and his children
obtained lot No. 535-E in their names as co-owners.
ISSUES: WON action for reformation must be dismissed due to prescription.
 July 16, 1959, they desired to end the co-ownership and had the land resurveyed
so that it could properly be subdivided. It was discovered that the land they are
RULING:
occupying was lot No. 535-A and not lot No. 535-E, while the land which remained
YES. A suit for reformation of an instrument may be barred by lapse of time. The in Atilano I, which passed to his successor, defendant Ladislao was lot No. 535-E
prescriptive period for actions based upon a written contract and for reformation of an and not No. 535-A
instrument is 10 years under the Civil Code. In the case at bar, respondent LGTI had 10  On January 25, 1960, heirs of Atilano II, who was by then also deceased, filed the
years from 1968, the time when the contract of lease was executed, to file an action for present action in CFI alleging that they offered to surrender to the defendants the
reformation. Unfortunately, it did so, and only filed on 1992 or 24 years after the cause of possession of No. 535 A and demanded in return the possession of No. 535-E.
action accrued, hence, its cause of action has become stale, thus, time-barred. Defendants refused to accept the exchanfe. Plaintiff’s insistence is quite
understandable, No. 535-E has an area of 2,612 sqm; No. 535-A has 1,808 sqm.
The CA upheld the ruling of the RTC that the 10-year prescriptive period should be  Defendant:
reckoned not from the execution of the contract of lease in 1968, but from the date of the o Reference to No. 535-E in the Deed of Sale of May 18 was an involuntary
alleged 4-year extension of the lease contract after it expired in 1988. As such, when the error;
action for reformation of instrument was filed in 1992 it was within 10 years from the o That the intention of the parties to the sale was to convey the lot
extended period of the lease. Respondent LGTI theorized, and the CA agreed, that the correctly identified as No. 535-A
extended period of lease was an "implied new lease" within the contemplation of the Civil o That since 1916, when he acquired the entirety of No. 535, and up to
Code, wherein, the other terms of the original contract were deemed revived in the implied Atilano I death had been possessing and had his house on the portion of
new lease. No. 535-E, after which he was succeeded in such possession by the
defendants
SC ruled that if the extended period of lease was expressly agreed upon by the parties, o As a fact Atilano I even increased the area under his possession when he
then the term should be exactly what the parties stipulated, not more, not less. The bought lot No. 536 from Fruto del Carpio.
prescriptive period of 10 years provided by the Civil Code applies by operation of o Defendant prayed that plaintiffs be ordered to execute in their favor the
law, not by the will of the parties. Thus, the right of action for reformation accrued from deed of transfer with respect to No. 535-E
the date of execution of the contract of lease in 1968.

ObliCon – Jan 30, 2018 Page 6

  Trial Court: embody the agreement by reason of mistake, fraud, inequitable conduct or
o Judgment in favor of plaintiffs on the ground that the property was accident (Art. 1359, et seq.). In this case, the deed of sale executed in 1920 need no
registered under the Land Registration Act, the defendants could not longer be reformed. The parties have retained possession of their respective
acquire it through prescription. No dispute as to the correctness of this properties conformably to the real intention of the parties to that sale, and all they
legal proposition. But the defendants, aside from alleging adverse should do is to execute mutual deed of conveyance.
possession in their answer and counterclaim, also alleged error in the
deed of sale of May 18.

Issue:

 WON the mistake vitiates the consent of the parties, or affects the validity and
binding effect of the contract between them

Held:

 No.
 Logic and common sense lean heavily in favor of the defendant’s contention. When
on sells or buys real property – a piece of land, for example – one sells or buts the
property as he sees it, in its actual setting and by its physical metes and bounds,
and not by the mere lot number assigned to it in the certificate of title.
 ITCAB, the portion correctly referred to as No. 535-A was already in the
possession of the vendee, Atilano II, who had constructed his residence therein,
even before the sale in his favor; even before the subdivision of the entire No. 535
at the instance of its owner, Atilano I.
 Atilano I had his house on the portion correctly identified, after the subdivision,
No. 535-E, even adding to the area thereof by purchasing adjoining lot from a
different owner. The two brothers continued in possession of the respective
portions for the rest of their lives, obviously ignorant of the initial mistake in the
designation of the lot subject of 1920 sale until 1959, when the mistake was
discovered for the first time.
 Real issue is not the adverse possession, but the real intention of the parties to
that sale.
 SC is convinced that the object thereof, as intended and understood by the parties,
was the specific portion where the vendee was already residing, where he
reconstructed his house at the end of the war, and where his heirs the plaintiffs
herein, continued to reside thereafter: namely, No 535-A; and designation as No
535-E in the deed of sale was a simple mistake in the drafting of the document.
 The mistake did not vitiate the consent of the parties, or affect the validity and
binding effect of the contract between them. The new Civil Code provides a
remedy for such a situation by means of reformation of the instrument. This
remedy is available when, there having been a meeting of the minds of the parties
to a contract; their true intention is not expressed in the instrument purporting to

ObliCon – Jan 30, 2018 Page 7

Sarming, et al. v Cresencio Dy, et al.
 She sought went to Registry of Deeds about the status of Lot 4163.
FACTS:
 OCT No. 3129-A covering Lot 4163 was still on file; Alejandra paid the necessary fees
 Petitioners are the successors-in-interest of original defendant Silveria Flores, while so that the title to Lot 4163 could be released to Silveria Flores, who promised to the
respondents Cresencio Dy and Ludivina Dy-Chan are the successors-in-interest of the lawyer for the reformation of the deed of sale.
original plaintiff Alejandra Delfino, the buyer of one of the lots subject of this case.
 Despite repeated demands, Silveria did not do so, prompting Alejandra and the
 Alleged in their complaint for reformation against Silveria Flores that they, with the vendors to file a complaint against Silveria for reformation of the deed of sale with
exception of Alejandra Delfino, are the heirs of Valentina Unto Flores, who owned Lot damages
5734

 After the death of Valentina, her three children took possession of Lot 5734 with each Trial Court: found in favor of respondents, who were the plaintiffs (Aljejandra Delfino) on
occupying a one-third portion; upon their death, their children and grandchildren took the following grounds
possession of their respective shares.
 Alejandra had been occupying one-half portion of Lot 4163 since 1956 and it was the
one pointed to her by the vendors.
 The other parcel, Lot 4163 which is solely registered under the name of Silveria, was
 The object of the sale, as understood by the parties, was that portion Y of Lot 4163 and
sub-divided between Silveria and Jose.
that its designation as Lot 5734 in the document of sale was a simple mistake in the
drafting of the document, which mistake, however, did not vitiate the consent of the
 Grandchildren of Jose and now owners of one-half of Lot 4163, entered into a contract parties or affect the validity and the binding effect of the contract between them.
with plaintiff Alejandra Delfino, for the sale of one-half share of Lot 4163 after offering Hence, the remedy of reformation of instrument is proper.
the same to their co-owner, Silveria, who declined for lack of money.
CA: affirmed ruling
 Silveria did not object to the sale of said portion to Alejandra Delfino.
ISSUE:
 Before preparing the document of sale, Alejandra’s lawyer, called Silveria and the heirs 1. WON there is a cause of action for reformation of instrument against Silveria Flores,
of Venancio to a conference where Silveria declared that she owned half of the lot while and consequently the petitioners;
the other half belonged to the vendors; and that she was selling her three coconut trees 2. WON reformation of the subject deed is proper by reason of mistake in designating the
found in the half portion offered to Alejandra Delfino for P15. correct lot number;
RULING:
 When said lawyer asked for the title of the land, Silveria Flores, through her daughter,
Cristita Corsame, delivered title covering Lot No. 5734, and not the correct title YES.
covering Lot 4163.
Reformation is that remedy in equity by means of which a written instrument is made or
 Believing that OCT No. 4918-A (the title delivered) was the correct title corresponding construed so as to express or conform to the real intention of the parties. As provided in
to Lot 4163, the lawyer prepared a notarized Settlement of Estate and Sale (hereinafter Article 1359 of the Civil Code:
deed) duly signed by the parties
 An action for reformation of instrument under this provision of law may prosper only
upon the concurrence of the following requisites:
 Silveria Flores was present during the preparation and signing of the deed and she (1) there must have been a meeting of the minds of the parties to the contact;
stated that the title presented covered Lot No. 4163. (2) the instrument does not express the true intention of the parties; and
(3) the failure of the instrument to express the true intention of the parties is due to
 Alejandra took possession and introduced improvements on the purchased lot, which mistake, fraud, inequitable conduct or accident.i
was actually one-half of Lot 4163 instead of Lot 5734 as designated in the deed.
 All of these requisites are present in this case. There was a meeting of the minds
 Then, Alejandra purchased the adjoining portion of the lot she had been occupying and between the parties to the contract but the deed did not express the true intention of
discovered that what was designated in the deed, Lot 5734, was the wrong lot.

ObliCon – Jan 30, 2018 Page 8

 the parties due to mistake in the designation of the lot subject of the deed. Borromeo v CA
 There is no dispute as to the intention of the parties to sell the land to Alejandra
Delfino but there was a mistake as to the designation of the lot intended to be sold as FACTS :
stated in the Settlement of Estate and Sale.
Before 1933, defendant [Jose A. Villamor] was a distributor of lumber belonging to Mr.
 While intentions involve a state of mind which may sometimes be difficult to decipher, Miller who was the agent of the Insular Lumber Company in Cebu City.
subsequent and contemporaneous acts of the parties as well as the evidentiary facts as
proved and admitted can be reflective of one’s intention. Defendant being a friend and former classmate of plaintiff [Canuto O. Borromeo] used to
borrow from the latter certain amounts from time to time.
 The totality of the evidence clearly indicates that what was intended to be sold to
Alejandra Delfino was Lot 4163 and not Lot 5734. On one occasion, defendant borrowed from plaintiff a large sum of money for which he
mortgaged his land and house in Cebu City to pay some pressing obligation with Mr. Miller.
- one-half of Lot 4163 is in the possession of plaintiff Alejandra Delfino since 1956
up to the present and it was the lot pointed to her by the vendors
- If it were true that Silveria Flores was the sole owner of Lot 4163, She did not Mr. Miller filed a civil action against the defendant and attached his properties including
object when Alejandra Delfino took possession of one-half thereof immediately those mortgaged to plaintiff, inasmuch as the deed of mortgage in favor of plaintiff could not
after the sale. be registered because not properly drawn up.
- Based on records, Silveria Flores owns only one-half of Lot 4163; the other half
belongs to her brother Jose, represented now by his grandchildren successors-in- Plaintiff then pressed the defendant for settlement of his obligation, but defendant instead
interest and can rightfully sell the land to Alejandra Delfino. offered to execute a document promising to pay his indebtedness even after the lapse of ten
- A spot investigation conducted by a duly licensed surveyor revealed that Lot 4163 years.
is subdivided into two portions, one belonging to Silveria Flores and the other to
the heirs of Jose Flores.
Liquidation was made and defendant was found to be indebted to plaintiff in the sum of
- If indeed it was Lot 5734 that was sold, then Silveria Flores was occupying more
than her share of the inherited lot. P7,220.00, for which defendant signed a promissory note therefor on November 29, 1933
with interest at the rate of 12% per annum, agreeing to pay as soon as I have money'.
 The object of the contract of sale, as intended and understood by the parties, was Lot
4163 covered by OCT 3129-A which Alejandra, and now her heirs, have been The note further stipulate that defendant 'hereby relinquish, renounce, or otherwise waive
occupying. my rights to the prescriptions established by our Code of Civil Procedure for the collection
or recovery of the above sum of P7,220.00. * * * at any time even after the lapse of ten years
 The designation of the lot in the deed of sale as Lot 5734, covered by OCT 4918-A, was from the date of this instrument'.
a mistake in the preparation of the document.
After the execution of the document, plaintiff limited himself to verbally requesting
 Reformation of the instrument is proper. defendant to settle his indebtedness from time to time.

Plaintiff did not file any complaint against the defendant within ten years from the
execution of the document as there was no property registered in defendant's name, who
furthermore assured him that he could collect even after the lapse of ten years.

After the last war, plaintiff made various oral demands, but defendants failed to settle his
account.

CFI: Villamor ordered to pay Borromeo (represented by his heirs) the sum of P7,220.00
within ninety days from the date of the receipt of such decision with interest at the rate of
12% per annum from the xpiration of such ninety-day period.

ObliCon – Jan 30, 2018 Page 9

CA: reversed CFI ruling
remain in force and subject to foreclosure as provided by law; that if after 4.5years
ISSUE:
stipulated in the mortgage, Emiliana should fail to redeem her mortgage, she
Whether or not the CA erred in reversing the ruling of the CFI in finding the lack of validity would execute a deed of absolute sale for the property in favor of the petitioner.
of the stipulation amounting to a waiver in line with the principle "that a person cannot
renounce future prescription" One year after execution of the deed, Emiliana failed to pay. Thus, Emiliana and the
petitioner entered into another verbal contract where she conveyed the
HELD possession of the land to the petitioner on the condition that the latter would not
collect interest on the loan. By virtue of the verbal contract, petitioner entered into
YES! Between two possible interpretations, that which saves rather than destroys is to be
possession of the land, gathered the fruits thereon, did not collect interest thereon,
preferred. It is a fundamental principle in the interpretation of contracts that while
ordinarily the literal sense of the words employed is to be followed, such is not the case
and introduced improvements to the property.
where they "appear to be contrary to the evident intention of the contracting parties,"
The CA concluded that the deed was that of an absolute purchase and sale of the
which “intention shall prevail” (Art. 1370).
land.
The terms, clauses and conditions contrary to law, morals and public order (in this case the
contested stipulation) should be separated from the valid and legal contract when such ISSUE:
separation can be made because they are independent of the valid contract which expresses
the will of the contracting parties. WON the deed was that of a mortgage or an absolute deed of sale.

RULING:
Kasilag vs. Rodriguez
The cardinal rule in the interpretation of contracts is to the effect that the
FACTS: intention of the contracting parties should always prevail because their will has
the force of law between them. Article 1370 of the NCC provides, that if the terms
Respondents, heirs of Emiliana Ambrosio, sought to recover from the petitioner of a contract are clear and leave no doubt as to the intention of the contracting
the possession of the land and its improvements granted by way of homestead to parties, the literal meaning of its stipulations shall control; and if the words appear
Emiliana including the fruits thereof. to be contrary to the evident intention of the parties, the intention shall prevail.

The petitioner alleged that the land was in possession by virtue of a notarized As the terms thereof are clear and leave no room for doubt, it should be
mortgage contract entered into between him and Emiliana. By way of interpreted according to the literal meaning of its clauses. The words used by the
counterclaim, petitioner asked the respondents to pay him the amount of P1,000 contracting parties clearly show that they intended to enter into the principal
with 12% interest per annum which Emiliana owed him. Furthermore, if the contract of loan in the amount of P1,000, with interest at 12% p.a., and into the
judgment be declared in favor of the respondents, that respondents be sentenced accessory contract of mortgage of the improvements on the land. In other words,
to pay him P5,000 for the improvements he introduced to the land. the parties entered into a contract of mortgage of the improvements on the land
acquired as homestead, to secure the payment of the indebtedness for P1,000 and
A public deed executed by Emiliana and the petitioner provided that Emiliana the stipulated interest thereon. In clause V the parties stipulated that Emiliana was
encumbers, by way of mortgage, the improvements of the land for a consideration to pay, within 4.5yrs , the debt with interest thereon, in which event the mortgage
of P1,000; that if Emiliana shall pay on or within 4.5 years after execution of the would not have any effect.
contract, the mortgage shall become null and void. Otherwise, the mortgage shall

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