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ONG CHUA v.

CARR • Moore informed Carr that the loan could not be made upon the properties, the
January 17, 1929 | Ostrand, J. | Reformation of Instruments: When Available titles to which were not clear and that the right of the spouses to repurchase was
PETITIONER: Ong Chua not entered upon the certificates to said titles.
RESPONDENTS: Edward Carr, et al. • Moore also told Carr that the deed of sale could be made in such a form that Carr’s
title to the purchased lots would appear to be absolute but Carr had to bear in mind
SUMMARY: Henry Teck and Magdalena Lim owns some land which they sold to that the right of the spouses to repurchase still existed and that the documents
Ong Chua, with the right to repurchase within 4 years. The land was later sold to should be left in Moore’s possession until the expiration of the term for the right
Edward Carr. In the deed of sale however, the right to repurchase was removed, of repurchase and that, if the deed were made in that form, the loan of P6.5k could
without the knowledge of Ong. This was made in order for Carr to obtain a loan to be obtained.
ZBLA using the land. The loan from the ZBLA became unnecessary, but instead of • Moore instructed his clerk, Darlucio, to prepare and typewrite the deed of sale
redrafting the deed, it was agreed that Moore would keep the deed and would not without including therein the condition that the sale was subject to Teck's and
deliver them to any one until the expiration of the period for repurchase. Lim's rights to repurchase.
Moore then became ill and while under medical treatment, Carr demanded the • The deed was signed by Ong Chua in the presence of Darlucio and duly
documents be delivered to him and to escape further annoynces, Moore surrendered acknowledged before Moore as notary public. But it should be noted that Ong
the deed to Carr who almost immediately presented it to the registry for registration. Chua did not understand English and was ignorant of the arrangement between
Henry offered to repurchase the property but Carr refused to reconvey it, claiming he Moore and Carr in connection with the loan. Also, he asked Moore if the
had an absolute right to the title. The CFI ruled in Ong Chua’s favor which was then document contained the conditions in reference to Teck's right to repurchase the
affirmed by the SC. property and was told that the document was sufficient.
• After the deed was prepared and signed, Ong Chua told Carr and Moore that lot
DOCTRINE: Reformation of a deed will be granted where there is a mistake on one No. 137 was mortgaged by him to the BPI for P6,500, the rate of interest being
side and fraud or unfair dealing on the other and the defrauded party comes into court 10 per cent per annum.
with clean hands • Moore stated that the ZBLA could not lend money at less than 13 per cent per
annum. Ong Chua then stated that he was willing to let the mortgage on the lot
FACTS: given to the bank stand until the expiration of the term for the repurchases.
• Spouses Henry Teck and his wife Magdalena sold their parcels of land in question • As this arrangement would save Carr a considerable sum of money, he agreed and
to Ong Chua. On June 17, 1923. Ong Chua executed a public document granting paid only P13.5K and promised, in writing, to pay the balance of the purchase
the spouses the right to repurchase said lots. But neither one of the documents was price, P6.5K, with interest at 10 per cent per annum, on or before July 1, 1927.
placed on record with the register of deeds. • The loan from the ZBLA thus became unnecessary, but instead of redrafting the
• Carr went to the office of Moore in Zamboanga (a practicing attorney in their deed, it was agreed that Moore would keep the deed and the other documents in
town) and sought the advice and assistance of Moore with regard to purchasing his custody and would not deliver them to any one until the expiration of the
coconut lands. period for repurchase.
• Moore then called Carr’s attention to the questioned lots and told him he could • In 1926, Moore was taken critically ill, and while he was under medical treatment
purchase the lots. Carr entered into negotiations with Ong Chua and Moore. in the Zamboanga Hospital, Carr came to him on various occasions and demanded
Moore informed Carr that Spouses Henry and Magdalena had the right to that the documents be delivered to him.
repurchase said lots that would expire on June 1927. • At first Moore refused to make the delivery on the ground that it was contrary to
• Before drafting the deed of sale, Ong Chua told Moore that he consented to sale their agreement and might result to the prejudice of the rights of Teck and Lim,
of the properties to Carr on the condition that the sale should be subject of the but Carr continued to molest Moore with his demand for the delivery of the
rights of the spouses to have the property reconveyed to them, and said rights papers, and finally, in order to escape further annoyances and insinuations of Carr,
should be respected. he surrendered the deed to the latter, who almost immediately presented it to the
• The purchase price was P20k. When the deed of sale was about to be drafted, Carr register of deeds for registration.
told Moore that he only had P13.5k on hand and he was to obtain a loan of P6.5k • In July, 1926, Teck offered to repurchase the property in question
from the Zamboanga Building & Loan Association (ZBLA), in which Moore was from Ong Chua who thereupon demanded of Carr the reconveyance of the
the secretary. property to the spouses, but Carr refused to do so, claiming that he had an absolute

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title to said property, and Ong Chua then learned, for the first time, that the deed
in question contained no reference to the rights of Teck and Lim to repurchase the UNRELATED ISSUESS DISCUSSION (Civil Pro and Evidence issue ata ‘to).
property. Add facts: Subsequent to the filing of the answer, Carr died, and the administrator of
• Hence, this action was brought, the plaintiff alleging in substance the principal his estate, Manuel Igual, was substituted as defendant.
facts hereinbefore stated and demanding that the deed in question be reformed in • Defendant-appellants argued based on subsection 7 of section 383 of the Code of
accordance therewith. Civil Procedure, which bars parties to an action or proceeding against an executor
• Basing on the facts, the CFI of Zamboanga ordered the reformation of the deed, or administrator or other representative of a deceased person upon a claim or
Exhibit A, in accordance with the plaintiff's demand. demand against the estate of such deceased person from testifying as to any matter
of fact occurring before the death of such deceased person.
ISSUE/s: WoN the deeds can be reformed to contain the rights of the Spouses to Ø But it has generally been given a liberal construction to promote justice, and
repurchase – YES it is held that it never was intended to serve as a shield for fraud.
Ø In this case a number of credible witnesses testified to facts which
RULING: The appealed judgment is affirmed with the costs against the appellant. conclusively showed that Carr's conduct was tainted with fraud. The Ong
So ordered. Chua did not take the witness stand until after the existence of fraud on the
part of Carr had been established beyond a doubt and not by a mere
RATIO: preponderance of evidence. In these circumstances, we cannot hold that the
• The evidence is conclusive that the plaintiff had no clear conception of the trial court erred in not excluding the plaintiff's testimony.
contents of the deed. • Defendant-appellant also argued that the facts proven do not justify the
reformation of the deed in question.
Ø He was anxious to protect the rights of redemption held by the parties who
Ø It will be noted that counsel admits that the deed was left in escrow with
sold the land to him, is very obvious;
Moore, and if it were true that there was no mistake on the part of the Ong
Ø the deed was written in the English language, with which the plaintiff was
Chua at the time of the execution of the deed, a suit for reformation would
unfamiliar, and he had to rely on the statements of Moore as to the contents
hardly be appropriate. But that would not improve the appellant's position.
and effect of the deed and was told that the document was sufficient
Ø It is well settled that the condition upon which a deed is delivered in escrow
Ø . He had confidence in Moore, with whom he had had previous business
may be proved by parol evidence and that ordinarily the statute of frauds has
relations, and it was but natural for him to believe Moore's statement.
no application to such an agreement, nor is it affected by the rule of evidence,
• Carr, on the other hand, knew the contents of the deed and fully agreed to Moore's which prohibits a written contract from being contradicted or varied by parol
plan to place it in escrow until the expiration of the term for the repurchase or evidence.
redemption of the land. Ø It is also well established that an escrow delivered without authority or
Ø He, nevertheless, in violation of his own agreement, harassed Moore, then a obtained fraudulently passes no title. That is what occurred here; Moore had
very sick man, into giving him possession of the deed prematurely. no authority whatever to deliver the deed in escrow to Carr before the
Ø He took immediate advantage of that circumstance and hastened to have the expiration of the time for redemption. It follows that the certificates of title
document presented to the register of deeds for the issuance of certificates issued to Carr were of no legal effect and that the suit for the rescission of
of title. the deed and the cancellation of the corresponding certificates of title would
Ø It is elementary that such conduct constitutes fraud and was calculated to be in order.
obtain an unfair advantage over the plaintiff.
• Reformation will be given "where there is a mistake on one side and fraud
or unfair dealing on the other.”

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