Voidable Contracts Cases

I. Voidable Contracts (Arts.
1390 to 1402)
325. House International v. IAC, 151 SCRA 703

SECOND DIVISION
June 30, 1987
G.R. No. 75287
HOUSE INTERNATIONAL BUILDING TENANTS ASSOCIATION,

INC., petitioner-plaintiff,
vs.
INTERMEDIATE APPELLATE COURT, CENTERTOWN MARKETING
CORP., MANILA TOWERS DEVELOPMENT CORP., AND THE
GOVERNMENT SERVICE INSURANCE SYSTEM, respondents-
defendants.
CORTES, J.:
Petitioner House International Building Tenants Association, Inc.

(ASSOCIATION, for short) is a domestic non-stock, non-profit
civic corporation, whose incorporators, directors and members
constitute the great majority of more than a hundred heads of
families who are tenants of long and good standing of the 14-
storey House International Building located at 777 Ongpin Street,
Binondo, Manila. The land and the improvements thereon were
formerly owned by Atty. Felipe Ang who mortgaged the same to
the Government Service Insurance System (hereinafter referred
to as GSIS) to secure payment of an obligation. After foreclosure
I. Voidable Contracts (Arts. 1390 to 1402)
of the mortgage and for failure of Ang to exercise his right of

redemption over the foreclosed property, the ownership thereof
was consolidated with the GSIS which subsequently sold it to
Centertown Marketing Corporation (CENTERTOWN, for short) in
a deed of conditional sale, without notice to the tenants of the
building and without securing the prior clearance of the then
Ministry of Human Settlements.
As CENTERTOWN was not authorized by its Articles of

Incorporation to engage in the real estate business, it organized
a sister corporation, with almost an the same incorporators and
stockholders, as CENTERTOWN'S, under the corporate name of
Manila Towers Development Corporation (TOWERS, for short) for
the primary purpose of engaging in the real estate business.
Subsequently, CENTERTOWN assigned to its sister corporation
TOWERS all its rights and obligations under the Deed of
Conditional Sale, with the consent and approval of the GSIS.
Thereafter, herein petitioner filed a complaint with the Regional

Trial Court of Manila against CENTERTOWN, TOWERS and GSIS
for annulment of the deed of conditional sale and the
subsequent assignment thereof by CENTERTOWN to TOWERS.
The complaint alleged in part that the Deed of Conditional Sale
is null and void ab initio for being ultra vires, since defendant
CENTERTOWN is not qualified to acquire real estate property or
to engage in real estate transactions.
The court a quo * dismissed the complaint. Petitioner appealed

to the Court of Appeals after its motion for reconsideration was
denied by the trial court. The order of dismissal was affirmed by
the appellate court in a decision dated 4 February 1986 in AC-GR
CV No. 02691. ** Petitioner filed a motion for reconsideration,

which was denied in a resolution dated 26 June 1986. Hence, this
petition for review on certiorari.
The main issues raised in the petition are: (1) whether petitioner
has the personality to sue, on its own, as a corporation
representing its members who are tenants of the House
International Building, and (2) whether petitioner has a cause of
action against respondents GSIS, CENTERTOWN and TOWERS.
Section 2, Rule 3 of the Rules of Court provides:
Sec. 2. Parties in interest. Every action must be prosecuted

and defended in the name of the real party in interest. All
persons having an interest in the subject of the action and in
obtaining the relief amended shall be joined as plaintiffs.
The real party in interest is the party who stands to be benefited

or injured by the judgment or the party entitled to the avails of
the suit. " Interest" within the meaning of the rule means material
interest, an interest in issue and to be affected by the decree, as
distinguished from mere interest in the question involved, or a
mere incidental interest. Consequently, a person who is not a
party to a contract and for whose benefit it was not expressly
made cannot maintain an action thereon, notwithstanding that
the contract, if performed by the parties to it, would incidentally
inure to his benefit. (Francisco, the Revised Rules of Court in the
Phil., Vol., 1, p. 126).
In the present case, the real parties in interest are the tenants of
the House International Building and not the petitioner
ASSOCIATION, which has a personality separate and distinct
from that of its members and therefore it has the capacity to sue
and be sued although it is composed of the tenants. Petitioner
has not shown any real, actual, material, or substantial interest
in the subject matter of the action. In this connection, the Court
of Appeals properly observed:
Appellant has sued in its name, but has not alleged any right
belonging to it that was violated or any wrong that was
committed. The reason is obvious, the benefits are not really
meant for appellant but for the unnamed great majority" of its
members who have allegedly been tenants of' long standing of
the building in question. (Decision of Court of Appeals, p. 2).
And, quoting from the Brief for the respondent-defendant GSIS,

the Court of Appeals further said:
Assuming arguendo, that the tenants have the alleged right, such
rights of the tenants are personal and individual rights which can
only be claimed by the tenants who must necessarily be the
indispensable and real parties in interest and certainly not the
plaintiff-appellant organization. (Ibid, p. 2.)
With regard to the second main issue, the petitioner asserts that
the Court of Appeals erred in ignoring the provisions of Art.
1409 of the Civil Code on void or inexistent contracts, the
contract at bar being void, inexistent, and absolutely wanting in
civil effects because "its consideration is illicit and/or the object

violates some mandatory provisions of the laws."
Cited to support this assertion are provisions of the 1973

constitution on eminent domain (Art. IV, sec. 2, also Art. XIV, sec.
3) agrarian reform (Art. XIV, sec. 12) and the Declaration of
Principles and State Policies particularly those emphasizing the
"stewardship concept, under which property is supposed to be
held by the individual only as trustee for the people in general,
who are its real owners." (Art. II, secs. 6 and 7).
As bases for a declaration that the conditional sale between GSIS

and CENTERTOWN is null and void for being contrary to law or
public policy, the constitutional provisions are inapposite. Not
one of those provisions render unlawful the contract in question.
Except for the prohibition against the taking of private property
for public use without just compensation, the other provisions
require implementing legislation to confer a legal right and
impose a legal duty which can be judicially invoked.
P.D. No. 1517 which confers a preferential right to tenants of

long standing to acquire leased land on which they have
constructed their houses. This has no application to the present
case where the property involved is land and building belonging
to the lessor.
The petitioners likewise invoke our ruling in Mataas na Lupa

Tenants Association Inc. et al. vs. Dimayuga, et. al. (G.R. L-32049,
June 25, 1984, 130 SCRA 30) where we upheld the petitioners
right of first refusal over land they had leased and occupied for
more than ten (10) years and on which they had constructed their
houses, a right given them under P.D. No. 1517 (and
Proclamation No. 1967 of May 14, 1980). For two reasons this
case gives the petitioners' case no support. In Mataas na Lupa the
members of the ASSOCIATION were also plaintiffs in their
individual capacity. This is not so in the present case.
Furthermore, it is not the first time this issue has come before
Us. In the case of Santos vs. Court of Appeals, G.R. L-60210,
March 27,1984, 128 SCRA 428. We laid down the following
doctrine.
P.D. 1517 in referring to the pre-emptive or redemptive right of

a lessee speaks only of urban land under lease on which a tenant
has built a home and on which he has resided for ten years or
more. If both the land and the building belong to the lessor, the
right referred to hereinabove does not apply.
The main thrust of the petitioner's challenge on the validity of

the conditional sale is that the contract is ultra vires because the
respondent CENTERTOWN is not qualified to acquire properties
under its Articles of Incorporation. The petitioner has confused
a void contract with an ultra vires contract which is merely
voidable.
We agree with the Court of Appeals that on this issue the

provision of Art. 1397 of the Civil Code is in point, thus:
Art. 1397. The action for the annulment of contracts may be

instituted by all who are thereby obliged principally or
subsidiarily.
Petitioner is neither a party nor a privy to the Deed of

Conditional Sale and the assignment thereof: thus, it cannot
assail the validity of the said contracts. In Ibañez vs. Hongkong
and Shanghai Bank, we said:
From these legal provisions it is deduced that it is the interest

had in a given contract, that is the determining reason of the
right which lies in favor of the party obligated principally or
subsidiarily to enable him to bring an action for the nullity of the
contract in which he intervened, and, therefore, he who has no
right in a contract is not entitled to prosecute an action for
nullity, for, according to the precedents established by the
courts, the person who is not a party to a contract, nor has any
cause of action or representation from those who intervened
therein, is manifestly without right of action and personality
such as to enable him to assail the validity of the contract.
(Decisions of the supreme court of Spain, of April 18, 1901, and
November 23, 1903, pronounced in cases requiring an
application of the preinserted article 1302 of the Civil Code.) (22
Phil. 572; 584).
In the decision sought to be reviewed We agree with the Court of

Appeals that:
The corollary issue is whether appellant has the personality to

assail the validity of the conditional sale and its assignment. The
answer is partly supplied by the above discussion: further
arguments against the appellant are the provisions of the Civil
Code which say that contracts take effect only between parties
(Art. 131 1) hence the action for their annulment may be
instituted only by those who are thereby obliged principally or

subsidiarily (Art. 1397). Appellant is not privy to either the deed
of conditional sale or the assignment. (Decision of Court of
Appeals, p. 3).
WHEREFORE, the petition is DENIED, with costs against the

petitioner.
SO ORDERED.
Fernan (Chairman), Gutierrez, Jr., Paras and Padilla, JJ., concur.

Bidin. J., took no part.
Footnotes
* Hon. Hector C. Fule, presiding.
** Penned by Justice Serafin Camillon with the concurrence of

Justices Crisolito Pascual, Jose C. Campos, Jr., and Desidero P.
Jurado: Rollo, pp. 80-84.
326. Malabanan v. Gaw Ching, 181 SCRA 84

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 74938-39 January 17, 1990
ANGELINA J. MALABANAN, petitioner,

vs.
GAW CHING and THE INTERMEDIATE APPELLATE COURT,
respondents.
G.R. No. L-75524-25 January 17, 1990
LEONIDA CHY SENOLOS, LEONARD CHAN and LEONSO CHY

CHAN, petitioners,
vs.
INTERMEDIATE APPELLATE COURT and GAW CHING,
respondents.
Puruganan, Chato, Chato, Chato & Tan and Romero, Lagman,

Torres, Arrieta & Evangelista for petitioners in 75524-25.
Quiason, Makalintal, Barot & Torres for petitioners in 74938-39.
Limqueco & Macaraeg Law Office and Herminio T. Sugay for

respondent Gaw Ching.
RESOLUTION
FELICIANO, J.:
The two (2) Petitions before us — G.R. Nos. 74938-39 and 75524-
25 — assail the decision of the then Intermediate Appellate Court
in A.C.-G.R. CV Nos. 05136-05137 dated 31 January 1986, which
reversed the decision of the Regional Trial Court in two (2)
consolidated cases, namely: Civil Case No. R-81-416 and Civil
Case No. R-82-6789. Upon motion of petitioners, we ordered the
consolidation of the two (2) Petitions.
Respondent Gaw Ching instituted two (2) cases against

petitioners Angelina Malabanan, Leonida Senolos, et al. in
connection with the sale of piece of land located in Binondo,
Manila. The first case, Civil Case No. R-81-416, sought to annul
such sale and to enjoin the demolition of a building standing on
that piece of land, and also prayed for the award of damages.
The second case, Civil Case No. G.R. 82-6798, demanded

damages from petitioner Senolos for bringing about the
demolition of the building.
The following facts found by the trial court, and adopted and
incorporated by the appellate court, are undisputed:
Evidence for plaintiff showed that Gaw Ching has been leasing
the house and lot located [in] 697-699 Asuncion Street, Binondo,
Manila from Mr. Jabit since 1951. Plaintiff conducted his
business (Victoria Blacksmith Shop) on the ground floor and
lived on the second floor. When Mr. Jabit died, his daughter,
defendant Malabanan continued to lease the premises to plaintiff
but at an increased rental of P1,000.00 per month. Before the
increase, Gaw Ching paid P700.00 per month, as evidenced by
receipts of rentals. There was no written contract of lease
between plaintiff and Mr. Jabit as to its duration but the rentals
were evidently, paid monthly. On April 27, 1980, Angelina
Malabanan told him that she was selling the house and lot for
P5,000.00 per square meter. Plaintiff told her however, that the
price is prohibitive. On May 13, 1980, defendant Malabanan
wrote plaintiff, reiterating that she was selling the house and lot
at P5,000.00 per square meter and that if he is not agreeable, she
will sell it to another person. After receiving the letter, plaintiff
turned over the letter to his counsel, Atty. Sugay. Gaw Ching
claims that he is not in a position to buy the property at
P5,000.00 per square meter because it was expensive.
Subsequently, Gaw Ching tried to pay the rent for June, 1980, but
Malabanan refused to accept it. Plaintiff's counsel advised him to
deposit the rentals in a bank which he did, after which, his
counsel wrote Malabanan informing her about the deposit (Exh.
B). On October 2, 1980, plaintiff received another letter from
defendant Malabanan which he gave to his counsel who told him

that said defendant is offering the house and lot at P5,000.00 per
square meter and that if he is not agreeable, she will sell the
premises to another person at P4,000.00 per square meter.
Plaintiff testified that he was willing to buy the subject property
at P4,000.00 but hastened to add that it was still expensive and
did not ask his counsel to write Malabanan about it. So, also, it
was the opinion of his counsel that it was not necessary to reply
because the context of the letter was invariably a threat. On
November 3, 1980, plaintiff received another letter from
Defendant Malabanan, informing him that the premises in
question had already been sold to defendant Leonida Senolos.
This time, Atty. Sugay sent a reply dated November 24, 1980,
requesting that the pertinent documents of the sale be sent to
them but according to plaintiff, they were not furnished a copy
of said sale. Consequently, plaintiff received a letter from Atty.
Techico dated December 5, 1980 demanding that he vacate the
premises and to pay the arrearages in rentals from October to
December, as they were more importantly, going to repair and
convert the dwelling into a warehouse. Atty. Sugay sent a reply
dated February 17, 1981 (Exh. C) requesting Atty. Techico to
furnish them with the Deed of Sale and TCT because he doubted
the veracity of the sale. It took a long time before Atty. Sugay's
letter was answered and he was never furnished a copy of the
Deed of Sale and Transfer Certificate of Title. After exerting all
efforts, plaintiff finally was able to procure a copy of the Deed
of Sale and TCT No. 14789 (Exh- A) which reflected that the date
of entry of the Deed of Sale was December 9, 1980, whereas the
Deed of Sale was dated August 23, 1979 (Exh. I). Plaintiff then
told Atty. Sugay to file a civil case against defendants. On
October 7, 1981, Atty. Techico sent a reply to Atty. Sugay's letter
of February 17, 1981 (Exh K). Plaintiff presented the receipt of
rentals he paid (Exhs. L to L-6). He deposited the monthly rentals
which Malabanan refused to accept, with the Pacific Banking
Corporation (Exh. M). At a later period, plaintiff had to move out

of the premises when it was demolished by the defendant. Gaw
Ching however, admitted that he was not yet a Filipino Citizen at
the time the offer to sell was made, i.e., on April 27, 1980, May
13, 1980 and October 2, 1980 and that he became a Filipino
citizen only on October 7, 1980, when he was issued a certificate
of naturalization (Exh. 1-Malabanan). He did not, however,
inform Malabanan on the matter of his newly acquired
citizenship. Likewise, Gaw Ching admitted that he did not make
any counter-offer in writing so as to price the property.
As to plaintiffs claim for damages, he testified, that this was

motivated by the incident on November 16, 1981, while he was
on the ground floor, when there was a sudden brownout, and
around 50 people came thereat, climbed the roof with the use of
a ladder, cut the electric wires and started banging the roof.
Plaintiff, his wife, and mother-in-law were in the house and about
7 laborers were in the shop when the incident happened. Plaintiff
then immediately called up Atty. Sugay and told him that
Leonida Senolos called some people to demolish the house.
Plaintiff further testified that ... he was not notified of the
demolition. . . . On that same day, Atty. Sugay arrived at about
10:00 a.m. and told plaintiff that he was going to the City Hall.
When Atty. Sugay came back, he was with Roldan (Building
Inspector), who ordered that the demolition be stopped, but
Leonida Senolos refused to heed the order. Atty. Sugay and
Roldan went back to the City Hall. . . . At about 3:00 p.m., Atty.
Sugay came back with another person from the City Hall who
presented a letter to Leonida Senolos to which defendant affixed
her signature. The formal letter was dated November 6, 1981
addressed to Leonida Senolos by Romulo del Rosario, City
Engineer and Building Officer. Upon receipt of the letter, the
policeman remained but the demolition continued. Plaintiff
together with Atty. Sugay, and the City Hall official, went to the
police precinct where the City Hall Official talked with somebody
in the precinct. It was only when they returned to the premises
at about 4:00 p.m. with a policeman that the demolition was
stopped. . . .
On cross examination, plaintiff admitted that he received a letter

from the Office of the City Engineer dated July 29, 1981 (Exh. 1-
Senolos) condemning the building. He also admitted that he was
furnished a copy of the Demolition Order (Exh. 2-Senolos) to
which he affixed his signature.
After receiving Exhibits "I" and "2," Gaw Ching still refused to
vacate the premises because he was told that the building was
still in good condition and he continued paying the monthly
rental.
On redirect, plaintiff declared that after receiving the notice of

the City Engineer, he filed a complaint with the Ministry of Public
Works and Highways by reason of which, the MPWH issued an
order that the demolition to be stopped. (Exh. 3).
xxx xxx xxx
Another witness presented by plaintiff was Felix Tienzo, Actg.

Chief of Enforcement Division, (Ministry of Public Works and
Highways). . .
Mr. Felix Tienzo believes that the City of Manila was correct in
ordering the demolition of the building but he intended to hold
in abeyance the demolition of the building only in obedience to
the order of the MPWH. However, both Mr. Tienzo and Mr. Roldan
claim that they do not usually receive an order from the MPWH
stopping the demolitions.
xxx xxx xxx 1
On 10 August 1984, the trial court rendered a decision which

upheld the validity of the contract of sale between petitioner
Malabanan and petitioner Senolos. The trial court declared that
petitioner Malabanan had not violated Sections 4 and 6 of
Presidential Decree No. 1517 in relation to Presidential
Proclamation No. 1893 and Letter of Instruction (LOI) No. 935
which provide for a preemptive right on the part of a lessee over
leased property. The trial court stressed that respondent Gaw
Ching had been given ample opportunity to exercise any right of
first refusal he might have had, but he had chosen not to do so.
Respondent Gaw Ching went on appeal to the then Intermediate

Appellate Court. By a vote of three (3) to two (2), the appellate
court voted to reverse the decision of the trial court and hence
to nullify the contract of sale between petitioners Malabanan and
Senolos inter se. 2 The majority also held that the transaction
between petitioners was vitiated by fraud, deceit and bad faith
allegedly causing damage to respondent Gaw Ching. Petitioners
were held liable jointly and severally to respondent for moral,
exemplary and actual damages in the amount of P350,000.00 and
for attorney's fees in the amount of P20,000.00 —
for the indulgence in inequitous conduct to plaintiff-appellant's

(respondent Gaw Ching) prejudice and for the unwarranted
demolition of the building by defendants-appellees (petitioners
herein) after the issuance of the cease-and-desist order on
October 30, 1981.
While holding that the land in question was located outside the
Urban Land Reform Zone declared by Proclamations Nos. 1767
and 1967, the majority ruled that circumstances surrounding the
sale of the land to petitioner Senolos had rendered that sale null
and void. The majority were here referring to the finding that
when petitioner Malabanan offered in October 1980 to sell the
land involved to respondent Gaw Ching at P5,000.00 per square
meter, that land had already been sold to petitioner Senolos as
early as August 1979 for only P1,176.48 per square meter. On
the matter of the demolition of the building, the majority held
that the same was unwarranted and that even if petitioner
Senolos had a demolition order,
that order of demolition was valid only if there are no more

tenants residing in the building. If there are tenants and they
refused to vacate, the order of demolition is unavailing. It could
not rise higher than the Civil Code and the Rules of Court. 3
In the instant Petitions for Certiorari, petitioners assail both the

annulment of the deed of sale and the grant of P350,000.00
worth of "moral, exemplary and actual damages" to respondent
Gaw Ching.
We believe that the Petitions must be granted.

The firmly settled rule is that strangers to a contract cannot sue

either or both of the contracting parties to annul and set aside
that contract. Article 1397 of the Civil Code embodies that rule
in the following formulation:
Art. 1397. The action for the annulment of contracts may be

instituted by all who are thereby obliged principally or
subsidiarily. However, persons who are capable cannot allege the
incapacity of those with whom they contracted; nor can those
who exerted intimidation, violence, or undue influence, or
employed fraud, or caused mistake base their action upon these
flaws of the contract. (Emphasis supplied)
Article 1397 itself follows from Article 1311 of the Civil Code
which establishes the fundamental rule that:
Art. 1311. Contracts take effect only between the parties,

their assigns and heirs, except in case where the rights and
obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law. The heir is
not liable beyond the value of the property he received from the
decedent.
xxx xxx xxx

(Emphasis supplied)
As long ago as 1912, this Court in Ibanez v. Hongkong and

Shanghai Bank, 4 pointed out that it is the existence of an interest
in a particular contract that is the basis of one's right to sue for
nullification of that contract and that essential interest in a given
contract is, in general, possessed only by one who is a party to
the contract. In Ibanez, Mr. Justice Torres wrote:
From these legal provisions it is deduced that it is the interest

had in a given contract, that is the determining reason of the
right which lies in favor of the party obligated principally or
subsidiarily to enable him to bring an action for the nullity of the
contract in which he intervened, and, therefore, he who has no
right in a contract is not entitled to prosecute an action for
nullity, for, according to the precedents established by the
courts, the person who is not a party to a contract nor has any
cause of action or representation from those who intervened
therein, is manifestly without right of action and personality
such as to enable him to assail the validity of the contract.
(Decisions of the Supreme Court of Spain, of April 18, 1901, and
November 23, 1903, pronounced in cases requiring an
application of the preinserted article 1302 of the Civil Code. 5
Mr. Justice Torres went on to indicate a possible qualification to

the above general principle, that is, a situation where a non-party
to a contract could be allowed to bring an action for declaring
that contract null:
He who is not the party obligated principally or subsidiarily in a

contract may perhaps be entitled to exercise an action for nullity,
if he is prejudiced in his rights with respect to one of the
contracting parties; but, in order that such be the case, it is
indispensable to show the detriment which positively would
result to him from the contract in which he had no intervention
xxx xxx xxx
(Emphasis supplied)
There is an important and clear, albeit implicit, limitation upon

the right of a person who is in fact injured by the very operation
of a contract between two (2) third parties to sue to nullify that
contract: that contract may be nullified only to the extent that
such nullification is absolutely necessary to protect the
plaintiff's lawful rights. It may be expected that in most
instances, an injunction restraining the carrying out of acts in
fact injurious to the plaintiff's rights would be sufficient and that
there should be no need to set aside the contract itself which is
a res inter alios acta and which may have any number of other
provisions, implementation of which might have no impact at all
upon the plaintiff's rights and interests.
What is important for present purposes is that respondent Gaw

Ching, admittedly a stranger to the contract of sale of a piece of
land between petitioners Malabanan and Senolos inter se, does
not fall within the possible exception recognized in Ibanez v.
Hongkong & Shanghai Bank. In the first place, Gaw Ching had no
legal right of preemption in respect of the house and lot here
involved. The majority opinion of the appellate court itself

explicitly found that the subject piece of land is located outside
the Urban Land Reform Zones declared pursuant to P.D. No.
1517. 7 Even assuming for purposes of argument merely, that
the land here involved was in fact embraced in a declared Urban
Land Reform Zone (which it was not), Gaw Ching would still not
have been entitled to a right of preemption in respect of the land
sold. In Santos v. Court of Appeals, 8 this Court held that the
preemptive or redemptive rights of a lessee under P.D. No. 1517
exists only in respect of the urban land under lease on which the
tenant or lessee had built his home and in which he had resided
for ten (10) years or more and that, in consequence, where both
land and building belong to the lessor, that preemptive or
redemptive right was simply not available under the law.
Finally, we are unable to understand the respondent appellate

court's view that respondent Gaw Ching having been a long-time
tenant of the property in question, had acquired a preferred right
to purchase that property. This holding is simply bereft of any
legal basis. We know of no law, outside the Urban Land Reform
Zone or P.D. No. 1517, that grants such a right to a lessee no
matter how long the period of the lease has been. If such right
existed at all, it could only have been created by contract; 9
respondent Gaw Ching does not, however, pretend that there had
been such a contractual stipulation between him and petitioners.
In the second place, assuming once again, for present purposes

only, that respondent Gaw Ching did have a preemptive right to
purchase the land from petitioner Malabanan (which he did not),
it must be stressed that petitioner Malabanan did thrice offer the
land to Gaw Ching but the latter had consistently refused to buy.
Since Gaw Ching did not in fact accept the offer to sell and did
not buy the land, he suffered no prejudice, and could not have
suffered any prejudice, by the sale of the same piece of land to
petitioner Senolos. No fraud was thus worked upon him
notwithstanding his insinuation that the sale of the land to
petitioner Senolos had preceded the offer of the same piece of
land to himself.
In the third place, and contrary to the holding of the majority

appellate court opinion, the fact that Gaw Ching had been lessee
of the house and lot was simply not enough basis for a right to
bring an action to set aside the contract of sale between the
petitioners inter se. A lessee, it is elementary, cannot attack the
title of his lessor over the subject matter of the lease. 10
Moreover, the lease contract between petitioner Malabanan and
respondent Gaw Ching must in any case be held to have lapsed
when the leased house was condemned and the order of
demolition issued.
II
We consider next petitioners' claim that the appellate court erred

grievously in imposing upon them an award of P350,000.00 for
"moral, exemplary and actual damages" not only because
petitioners had "indulged in inequitous conduct to [respondent
Gaw Ching's] prejudice" but also "for the unwarranted
demolition of the building by [petitioners] after the issuance of
the cease and desist order on October 30, 1981."
Here again, we are compelled to hold that the appellate court

lapsed into reversible error. The relevant conclusions of fact
which the trial court arrived at are set out in its decision in the
following manner:
On the legality of the demolition necessarily raising the question:

(3) whether or not plaintiff was notified within a reasonable
period of time of the demolition, and a fortiori whether this
admittedly exercise of police power, the validity of which was
already being determined by the Court could be stopped by a
pretenatural [sic] administrative order from the office of the
Assistant Secretary for Operation of the MPWH brought about by
an appeal by a person other than the owner of the building,
which office had not done anything to immediately forestall the
imminent injury to person and damage to property. (Please see
P.D. 1096, Rule XII, Sec. 5 thereof).
In the first place, the claim of the plaintiff that the demolition of
the house rented by him came as a surprise, is fiercely
contradicted by his own evidence. A copy of the demolition order
is attached to the complaint as Annex "L", now marked as Exhibit
"9" for the defendant Senolos, unmistakably show that plaintiff
received a copy of the order of demolition from the City
Engineer's Office, approved by the Mayor, on October 5, 1981.
Verily, the present action before the Court is procedurally and

substantially correct in abating a nuisance. This exercise of
police power is not only being cordoned sanitaired [sic] by the
doctrinal pronouncements, the provisions of Art. 482 in relation
to Art. 436 of the Civil Code, Sections 275 and 276 of the
compilation of ordinances of the City of Manila but also by Rule
VII, par. 5 of the implementing Rules and Regulations of the
National Building Code of the Philippines (P.D. 1096). Indeed, the
latter law does not authorize any person other than the owner,
to appeal the order of the City Engineer to the Ministry of Public
Works and Highways. This is the position espoused by the City
Legal Officer of Manila in defense of the City Engineer and the
Mayor, in opposition to the move of the plaintiff to dismiss the
order of demolition as improvidently issued.
The demolition was invariably a valid exercise of police power

which may be ordered done by the authorities or caused to be
done at the expense of the owner. The exigency is made more
demanding especially, the demolition, when it was ordered
stopped thru an order inadvertently issued, as it was not as a
consequence of an appeal by the owner of the building, but by
the lessee, was during its last stages.
It therefore stands to reason that the order of demolition which

is unquestionably legal could not be stopped by an inoperative
administrative order, assuming that the appeal to the MPWH
could validly be filed by the lessee, as it was filed only during the
finishing touches of a demolition. Decidedly, the move exude
physiological features of delay. This is compounded by the
failure of the MPWH to act assertively, which in a sense, could be
interpreted as an admission that the issuance of the order was
inopportune.
On the claim for damages predicated on (4) whether or not there

was an indscriminate careless handling and pilferage of the
properties of the plaintiff, causing their loss or destruction:
It is readily explained that between October 5, 1981 to November

6,1981, plaintiff could have avoided the misplaced fear, but
assuming without having necessarily to concede that he was not
able to guard against an actual demolition on November 6, 1981,
rendering him so helpless, and prompting him to just sit on the
sidewalk and watch the demolition team wreck the building
indiscriminately, thereby causing destruction and loss of his
personal properties, such as: (a) office equipment; (b) assorted
tools; (c) machines; (d) finished products; and (e) steel box
containing jewelries. The claim is almost too good to be true,
considering first, that these items were so huge that they could
not be spirited away without being noticed and, secondly; it has
been established that there was a policeman detailed to the
demolition scene from the start of the said demolition, to whom
he could have easily reported the matter, caused the
apprehension of the culprits, and prevent the loss of his personal
properties, thirdly, he could have grabbed the steel box
containing jewelries if this were the last thing he would have
done. Waiting idly by the sidewalk and watching your properties
pilfered by persons whom you could have successfully identified
at the time and referring the matter to the policeman on duty,
which plaintiff did not do, is certainly against the natural order
of things and the legal presumption that a person takes great
care of his concern. Plaintiff strongly relies on the alleged illegal
and indiscriminate destruction of his properties as basis for his
claim for damages. Truth to tell, there was no suddenness or
indiscriminate destruction of plaintiffs property nor pilferage
thereof, as alleged, in the demolition of the house owned by the
defendant. The order was lawful as it was an abatement of a
nuisance and the dismantling of the house owned by defendant
Senolos could only be conceived as having been carried out in a
manner consistent only with utmost care. Conversely, its
indiscriminate destruction is contrary to the interest of the
defendant Senolos as it is a truism that every bit of useful
material should be preserved either for use of, or for profit of

the owner. It would be sheer folly to assume that the demolition
team would have taken a selective method of care for the still
serviceable materials of the house and a destructive stance for
the properties of the occupants. Understandably, the
unorthodox position taken by plaintiff would not only lose his
residence but also his place of business.
By and large, the basis for the claim for damages do not
physically nor imaginatively exist, for it has defied reason and
common sense. 11
We note that the majority opinion chose to disregard the above

conclusions of fact of the trial court and instead quoted
extensively from respondent Gaw Ching's brief and, presumably
relied upon such brief The majority opinion, however, failed to
indicate why it preferred Gaw Ching's version of the facts set out
in his brief over the trial court's findings. No indication was
offered where the trial court had fallen into error or what
evidence had been misapprehended by it. In this situation, the
Court considers that it must go back to the trial court's findings
of fact in line with the time-honored rule that such findings are
entitled to great respect from appellate courts since the trial
court judge had the opportunity to examine the evidence directly
and to listen to the witnesses and observe their demeanor while
testifying.
It appears therefore that firstly, the order of condemnation or

demolition had been issued by the proper authorities which
order was valid and subsisting at the time the demolition was
actually carried out. Secondly, under Section 5.3 of Rule VII
entitled "Abandonment/Demolition of Buildings" of the Rules

and Regulations Implementing the National Building Code of the
Philippines (P.D. No. 1096, as amended dated 19 February 1977),
an order for demolition may be appealed, by the owner of the
building or installation to be demolished, to the Secretary of
Public Works and Highways. In the case at bar, it was respondent
Gaw Ching, a lessee merely of the building condemned that
sought to block the implementation of the demolition order. It
does not even appear from the record whether or not Gaw Ching
actually filed a formal appeal to the Secretary, even though he
was not entitled to do so. What does appear from the record 12
is that Gaw Ching's counsel, Atty. Sugay, was able to obtain a
letter dated 6 November 1981 from the Office of the City
Engineer and Building Official, enclosing a xerox copy of a letter
from the Assistant Secretary for Operations, Ministry of Public
Works and Highways, "directing this office to hold the demolition
in abeyance." This letter, which did not purport to set aside the
order of demolition, was served upon the demolition team on
site while the demolition was in progress. After some hesitation,
the demolition was in fact stopped. 13
It is worth noting that officials from the Office of the City

Engineer, City of Manila, testified that it was not "normal practice
to receive an order from the Ministry of Public Works and
Highways stopping demolitions."
In the fourth place, respondent Gaw Ching, in the action that he

had filed before the Regional Trial Court of Manila to set aside
the contract of sale between petitioners Malabanan and Senolos,
had sought preliminary injunction precisely to restrain the
implementation of the order for demolition. That application for
preliminary injunction was denied by the trial court and the
order for demolition was implemented only after such denial.

Thus, there was no subsisting court order restraining the
demolition at the time such demolition was carried out.
In the fifth place, Gaw Ching had ample notice of the demolition
order and had adequate time to remove his belongings from the
premises if he was minded to obey the order for demolition. He
chose not to obey that order. If he did suffer any losses—the trial
court did not believe his claims that he did—he had only himself
to blame.
ACCORDINGLY, The Court Resolved to GRANT the Petition and

to REVERSE and SET ASIDE the Decision of the then Intermediate
Appellate Court dated 31 January 1986 and its Resolution dated
5 June 1986, in AC-G.R. CV Nos. 05136-05137. The Decision of
the trial court dated 10 August 1984 in consolidated Civil Cases
Nos. R-81-416 and R-82-6798, is hereby REINSTATED. No
pronouncement as to costs.
Fernan C.J., Gutierrez, Jr. and Cortés, JJ., concur.
Bidin J., took no part.
Footnotes
1 Decision, Regional Trial Court, Rollo, pp. 42-48; G.R. Nos.

75524-25.
2 Sison, P.V., J., ponente; Pascual and Britanico, JJ.,

concurring; Bidin and Veloso, JJ., dissented in a Separate
Opinion.
3 Decision, Intermediate Appellate Court; Rollo, p. 54; G.R.

Nos. 74938-39.
4 22 Phil. 572 (1912).
5 22 Phil. at 584; emphasis supplied.
6 2 Phil. at 584-585. See also Teves v. People's Homesite and

Housing Corporation, 23 SCRA 1141 (1968).
7 Sison, P.V., J., said: "The said parcel of land is outside the
declared Urban Land Reform Zone as per Proclamations Nos.
1767 and 1967" Rollo, p. 47. The reference to Proclamation No.
1767 is erroneous. Upon the other hand, Proclamation No. 1967,
dated 14 May 1980 (78 O.G. 6809 (19821) declared certain sites
in Metropolitan Manila as "areas for priority development in
Urban Land Reform Zones" and limited the application of
provisions of P.D. Nos. 1517, 1640 and 1642 and of L01 No. 935
to said zones. The subject land is not embraced in any of these
zones.
8 128 SCRA 428 (1984).
9 Lopez v. De la Cruz. et al., 94 Phil. 517 (1954).
10 Article 1436, Civil Code; e.g.: Lizada v. Omanan 59 Phil. 547

(1934); and Pascual v. Angeles, 4 Phil. 604 (1905).
11 Rollo, pp. 80-82; G.R. Nos. 75524-25.
12 Rollo, p. 44; pp. 47-48; G.R. Nos. 75524-25.
13 Rollo, p. 45; G.R. Nos. 75524-25.

327. Alcasid v. CA, 237 SCRA 419

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 104751 October 7, 1994
ISABEL RUBIO ALCASID, assisted by her husband DOMINGO A.

ALCASID, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and RUFINA L. LIM,
respondents.
Arnold V. Guerrero & Associates for petitioner.
Nelson A. Loyola and Danilo T. Arrienda for private respondent.
QUIASON, J.:
This is a petition under Rule 45 of the Revised Rules of Court to

set aside the decision of the Court of Appeals in CA-G.R. SP No.
26108 entitled "Rufina L. Lim v. Hon. Eustaquio Sto. Domingo, in
his capacity as Presiding Judge of the Regional Trial Court,
Fourth Judicial Region, Branch 35, Calamba, Laguna, and Isabel
Rubio Alcasid, assisted by her husband Domingo A. Alcasid."
Petitioner is one of the co-owners of two parcels of land located

in Calamba, Laguna. Private respondent offered to purchase
from petitioner and her co-owners the abovementioned
property. Petitioner was willing to sell her share for
P4,500,000.00 and only if all her co-owners would sell their
respective shares of the said land.
Petitioner engaged the services of Atty. Antonio A. Fernandez for

the purpose of negotiating the sale, without knowing that he was
also representing private respondent.
In March 1990, Atty. Fernandez confirmed to petitioner that all

her
co-owners were already amenable to sell their shares for
P1,500,000.00.
On March 4, 1990, petitioner signed a Deed of Sale drafted by

Atty. Fernandez. Subsequently, petitioner learned that the other

co-owners did not agree to sell their shares over the subject
property.
On November 4, 1990, petitioner filed a complaint in the

Regional Trial Court, Branch 34, Calamba, Laguna, for annulment
of the contract of sale and damages with a prayer for temporary
restraining order or writ of preliminary injunction against
private respondent.
Private respondent filed a motion to dismiss on the grounds that

the complaint stated no cause of action. The trial court denied
the motion to dismiss.
On August 20, 1991, a motion to declare private respondent in

default was filed by petitioner. This was granted by the trial
court.
Private respondent appealed the said orders of the trial court to

the Court of Appeals, which reversed the decision of the trial
court and held that the complaint stated no cause of action.
Hence, this petition.
II
Petitioner alleges that her complaint for annulment of contract

is based upon fraud, mistake and undue influence which vitiated
her consent. According to her, were it not for the

misrepresentation of private respondent and
Atty. Fernandez that her co-owners had agreed to sell their share
to private respondent, petitioner would not have agreed to sell
her share.
Private respondent, on the other hand, claims the complaint is in

the nature of malpractice suit against Atty. Fernandez and not
against her.
III
Petitioner contends that she was not aware that Atty. Fernandez
was also representing private respondent, but a letter dated
March 4, 1990 sent by
Atty. Fernandez to the petitioner belied her allegation.
The letter is reproduced in full, as follows:
March 4, 1990
TO: Mrs. Isabel R. Alcasid &

Mrs. Mila A. Marcos (daughter)
For and in behalf of my client, Miss Rufina L. Lim of Bucal,

Calamba, Laguna, I, Atty. Antonio A. Fernandez hereby confirm
that the selling price of One Million One Thousand Seven

Hundred Fifty
Pesos (P1,0001,750.00) is NET Purchase price and full payment
of Lot Nos. 44-10-A-4 & 199 New-A-4.
My client, Miss Rufina Lim, the vendee, hereby assumes the full
payment of BIR capital gain tax and transfer fee. Likewise, my
said clients shall shoulder Register of Deed's registration and
transfer fees, including all the documentary & science stamps.
Attorney's fees and back taxes and other related fees shall be
exclusively paid by the vendee, Miss Lim.
In payment for the said purchase price, the full amount is

represented by PNB DEMAND DRAFT NO. ________ issued on
March ___, 1990.
This arrangement is also true to other vendors, namely Ignacio

Rubio, Felix Rubio, Heirs of Eufrosina Laygo, Heirs of Luz Rubio
& Heirs of Amador Rubio.
ANTONIO A. FERNANDEZ
Counsel for Miss Rufina Lim
(Rollo, p. 7; Emphasis supplied)
On the matter of fraud, Article 1338 of the Civil Code of the

Philippines provides:
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 (Art. 1338, Civil Code).
In order that fraud may vitiate consent and be a cause for

annulment of contract, the following must concur:
1.) It must have been employed by one contracting party upon

the other (Art. 1342 and 1344);
2.) It must have induced the other party to enter into the
contract (Art. 1338);
3.) It must have been serious (Art. 1344);
4.) It must have resulted in damage and injury to the party

seeking annulment (Tolentino, IV Commentaries on the Civil
Code of the Philippines, 507 [1991 ed]).
As to the alleged mistake, Article 1331 of the Civil Code of the

In order that mistake may invalidate consent, it should refer to

the substance of the thing which is the object of the contract, or
to those conditions which have principally moved one or both

parties to enter into the contract.
To invalidate consent, the error must be real and not one that
could have been avoided by the party alleging it. The error must
arise from facts unknown to him. He cannot allege an error which
refers to a fact known to him or which he should have known by
ordinary diligent examination of the facts. An error so patent and
obvious that nobody could have made it, or one which could have
been avoided by ordinary prudence, cannot be invoked by the
one who made it in order to annul his contract (Tolentino, supra
at pp. 486-487).
Petitioner could have avoided the alleged mistake had she

exerted efforts to verify from her co-owners if they really
consented to sell their respective shares.
As to undue influence, Article 1337 of the Civil Code of the

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.
Undue influence, therefore, is any means employed upon a party

which, under the circumstances, he could not well resist and
which controlled his volition and induced him to give his consent
to the contract, which otherwise he would not have entered into.
It must in some measure destroy the free agency of a party and
interfere with the exercise of that independent discretion which
is necessary for determining the advantages or disadvantages of
a proposed contract (Tolentino, supra at p. 501). If a competent
person has once assented to a contract freely and fairly, he is
bound thereby.
The finding of the Court of Appeals that petitioner executed the

contract of her own free will and choice and not from duress is
fully supported by the evidence. Such finding should not be
disturbed (Martinez v. Hongkong & Shanghai Bank, 15 Phil. 252
[1910]).
Private respondent did not commit any wrongful act or omission

which violated the primary right of petitioner. Hence, petitioner
did not have a cause of action (State Investment House, Inc. v.
Court of Appeals, 206 SCRA 348 [1992]).
WHEREFORE, the petition is DENIED. The decision of the Court

of Appeals appealed from is AFFIRMED.
SO ORDERED.
Cruz, Davide, Jr., Bellosillo and Kapunan, JJ., concur.

328. Cayabyab v. IAC, 231 SCRA 1

SUPREME COURT
Baguio
FIRST DIVISION
G.R. No. 75120 April 28, 1994
POLICARPIO CAYABYAB, petitioner,

vs.
THE HONORABLE INTERMEDIATE, APPELLATE COURT,
FAUSTINO, GABRIEL, SOLEDAD & FRANCISCA, and all surnamed
LANDINGIN and AMPARO FRANCISCO, respondents.
Villamor A. Tolete for petitioner.
Juan O. Reyes, Manuel, Jr., Nepuscua & Pimentel, Jr. Law Offices
for private respondents.
QUIASON, J.:
This is a petition for review on certiorari under Rule 45 of the

Revised Rules of Court to reverse and set aside (1) the decision
of the Court of Appeals in AC-G.R. CV No. 03883, reversing the
decision of the Regional Trial Court of Pangasinan, Branch XLII,
Dagupan City, in Civil Case No. D- 5101; and (2) its resolution
denying the motion for reconsideration of the decision.
We deny the petition and affirm the decision and resolution of

the Court of Appeals.
Respondents Gabriel, Soledad and Francisca, all surnamed

Landingin, are children of respondent Faustino Landingin and
the late Agapita Ferrer. Petitioner is the son of Agapita Ferrer by
her first husband, Ludovico Cayabyab, while respondent Amparo
Francisco is petitioner's niece, being the daughter of his sister,
Nieves Cayabyab.
In their second amended complaint filed against petitioner

before Branch VII of the Court of First Instance of Pangasinan
docketed as Civil Case No. D-5101, private respondents asked for
the annulment of the deeds of sale and the recovery of
possession of four parcels of land with damages. Two of the
parcels of land (Lots [a] and [d]) are situated in Dagupan City
while the other two (Lots [b] and [c]) are situated in Barrio Botao,
Sta. Barbara, Pangasinan.
Private respondents alleged that petitioner was able to obtain the

signatures of Agapita Ferrer and respondent Faustino Landingin
in the deeds of sale through fraud, undue influence and abuse of
confidence. It was only in 1980, or three years thereafter, that
they learned of said sales after respondent Gabriel Landingin
received from petitioner a demand to vacate Lot (d) on which
petitioner and private respondents all reside. According to
private respondents, these lots form part of their inheritance as
the compulsory heirs of Agapita Ferrer, to the exclusion of
petitioner, who already received his share during Ferrer's
lifetime.
In his answer, petitioner did not claim Lot (a) but alleged that he
acquired by purchase one-third portion of Lots (b) and (c) by
virtue of a Deed of Absolute Sale executed by respondent
Faustino Landingin and Agapita Ferrer on March 21, 1973 and
notarized before Notary Public Eduardo B. Siapno (Exh. "O"; Exh.
"10"); the remaining two-thirds portion of Lots (b) and (c) by
virtue of a Deed of Absolute Sale executed by respondent
Faustino Landingin and Agapita Ferrer before Notary Public Juan
S. Caguioa on April 21, 1977 (Exh. "P"; Exh. "9"); and Lot (d) by
virtue of a Deed of Absolute Sale executed by Agapita Ferrer with
the marital consent of respondent Faustino Landingin on April
21, 1977 (Exh. "N"; Exh. "2").
On May 9, 1984, the trial court rendered judgment dismissing

the complaint without pronouncement as to damages and costs.
Both parties appealed to the Intermediate Appellate Court, with

private respondents questioning the merits of the decision and
petitioner questioning the omission of an award for damages.
On October 7, 1985, the Intermediate Appellate Court rendered

judgment reversing the questioned decision. It ordered the
annulment of the deeds of sale over the subject lots and declared
the heirs of Agapita Ferrer and respondent Faustino Landingin
the owners and rightful possessors of the parcels of land in
question. The dispositive portion of the decision reads as
follows:
WHEREFORE, in view of the improper appreciation of the facts

by the Court a quo, which likewise misapplied the law involved
therein, We hereby reverse and set aside the appealed decision
and render another one annulling the deeds of sale executed on
March 21, 1973 (Exh. 0 or 10) and on April 21, 1977 (Exh. P or 9
and Exh. N or 2), covering Parcels (b), (c) and (d) of the complaint,
cancelling Transfer Certificate of Title No. 37058 (Exh. 4) and
reinstating Transfer Certificate of Title No. 10018 (Exh. H),
declaring the four (4) lands described in the complaint as owned
by the heirs of Faustino Landingin and Agapita Ferrer. We hereby
order the defendant to immediately surrender possession
thereof to the plaintiffs. No damages and costs (Rollo, p. 71).
Hence, this recourse.
II
It is an established principle that the factual findings of the

Court of Appeals are final and conclusive on this Court. However,
where the findings of the Court of Appeals and the trial court are
contrary to each other, we deem it necessary to review the
records and the evidence of the instant case (Gaw v. Intermediate

Appellate Court, 220 SCRA 405 [1993]; Lauron v. Court of
Appeals, 184 SCRA 215 [1990]; Valenzuela v. Court of Appeals,
191 SCRA 1 [1990]). There is no dispute that the lands subject of
this case, namely, Lots (a), (b), (c) and (d) formerly belonged to
the conjugal partnership of respondent Faustino Landingin and
Agapita Ferrer. The ownership over Lot (a) is, however, not being
contested by petitioner and therefore respondents' claim that it
is conjugal stands uncontradicted.
Petitioner's evidence show that: the one-third portion comprising

1,806 square meters each of Lots (b) and (c) were sold on March
21, 1973 by the spouses to petitioner for a consideration of
P1,000.00 (Exh. "O"; Exh. "10"); the remaining two-thirds portion
of the same lots comprising 3,612 square meters each were sold
to petitioner on April 21, 1977 for a total consideration of
P3,612.00 (Exh. "P"; Exh. "9"); and, on the same date, the spouses
also sold Lot (d) to petitioner for a consideration of P5,000.00
(Exh. "N"; Exh. 2). All these transactions were evidenced by deeds
of sale signed by respondent Faustino Landingin and
thumbmarked by Agapita Ferrer, which were witnessed by two
persons and acknowledged by the vendors before a notary
public. The sale of Lot (d) was recorded on April 28, 1977 with
the Register of Deeds, who cancelled TCT No. 10018 in the
spouses' name and accordingly issued TCT No. 37058 in
petitioner's name.
Petitioner claims that the sale of the subject lots to him is valid
and binding as clearly evidenced by the deeds of sale which are
public documents. According to him, private respondents'
allegation of fraud, deceit and undue influence have not been
established sufficiently and competently to rebut the

presumption of regularity and due execution of the deeds of sale.
Indeed, the general rule is that whosoever alleges fraud or

mistake in any transaction must substantiate his allegation,
since it is presumed that a person takes ordinary care for his
concerns and that private transactions have been fair and
regular. This rule is especially applied when fraud or mistake is
alleged to annul notarial documents which are clothed with the
prima facie presumption of regularity and due execution
(Revised Rules on Evidence, Rule 132 [B], Sec. 30).
Nevertheless, the general rule admits of exceptions, one of which

is Article 1332 of the Civil Code which 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.
Under the foregoing provision, where a party to a contract is

illiterate, or can not read nor understand the language in which
the contract is written, the burden is on the party interested in
enforcing the contract to prove that the terms thereof are fully
explained to the former in a language understood by him (Sales
v. Court of Appeals, 211 SCRA 858 [1992]; Heirs of Enrique
Zambales v. Court of Appeals, 120 SCRA 897 [1983]; Bunyi v.
Reyes, 39 SCRA 504 [1971]). In all contractual, property or other
relations, where one of the parties is at a disadvantage on
account of his physical, mental or other handicap, the courts
must be careful and vigilant for his protection (Civil Code of the
Philippines, Art. 24; Rural Bank of Caloocan, Inc. v. Court of
Appeals, 104 SCRA 151 [1981]; Tang v. Court of Appeals, 90
SCRA 236 [1979]).
In the case at bench, both respondent Faustino Landingin and

Agapita Ferrer were illiterate. The latter, in fact, could only
thumbmark her signature on all the deeds of sale (Exhs. "2-B"; "9-
D"; "10-C"); and although respondent Faustino Landingin may
have affixed his signature to the deeds of sale, he could neither
read nor write and actually lost the use of his right arm to
paralysis in 1971 (TSN, September 10, 1981, pp. 4-5). To make
matters worse, all the deeds were written in English while the
spouses could speak and understand only the Pangasinense and
Ilocano dialects (TSN, June 30, 1981, pp. 14-15; Id., Sept. 10,
1981, pp. 4-6; Id., Aug. 21, 1982, pp. 21-22).
Since fraud and undue influence in the execution of the subject

deeds are alleged by respondents, the burden, under the
circumstances, shifted to petitioner to prove that the contents
thereof had been adequately explained to the vendors and that
the latter fully understood the same (Heirs of Enrique Zambales
v. Court of Appeals, supra., at 904).
As very well found by the Court of Appeals, petitioner failed to

discharge this burden.
The testimonies of Bartolome Ceralde and Dr. Alfredo Cerezo are

not sufficient and credible enough to tip the scale in favor of
petitioner.
First, Ceralde is a "compadre" of petitioner. The fact that the

respondent Faustino Landingin and Agapita Ferrer sold a parcel
of land to him in 1973, does not necessarily make the sale of the
lots to petitioner valid and binding. Dr. Cerezo, on the other
hand, has been the spouses' physician since 1955 and his
testimony that he never knew of Agapita Ferrer's eye operation
and hospital confinement in Manila (TSN, August 27, 1982, p. 25)
raises serious doubts about his credibility.
Second, when the two contracts were executed and witnessed by

Dr. Cerezo in 1977, Agapita Ferrer and respondent Faustino
Landingin were 81 years old. In fact, barely six months later,
Agapita actually died of senility, as stated in her death certificate
(Exh. "A").
Third, both Dr. Cerezo and Ceralde testified that Atty. Tandoc,
the lawyer who allegedly drew up the deeds of sale in 1977, read
and explained in Pangasinense the contents of said deeds to the
spouses. Ceralde, however, was not present when Atty. Tandoc
allegedly performed the said act. Surprisingly too, Atty. Tandoc
allegedly performed the said a witness. Even Attys. Caguioa and
Siapno, who notarized respectively the same deeds of sale, as
well as the 1973 contract, were never called to testify. No
explanation whatsoever was given as to the failure of petitioners
to present these two notaries public who notarized the deeds of
sale in question.
The weight of the testimony of Dr. Cerezo is therefore

undermined by this lapse on the part of petitioner. Only the two
notaries public could be examined and cross-examined on the
accuracy of their translation of the contents of the documents

written in English into the dialect known to and understood by
the vendors.
Fourth, the couple was not assisted by any of their children in

the execution of the subject contracts. This circumstance is
strange and highly suspicious. Magdalena, respondent Faustino
Landingin's daughter by his first marriage, and Soledad
Landingin were then living with their parents. Like Amparo
Francisco, their step-niece, they actually assisted the couple in
their correspondences and transactions (TSN, June 22, 1981, pp.
4, 15; Id., June 30, 1981, p. 17; Id., Sept. 10, 1981, pp. 3, 14; Id.,
October 21, 1982, pp. 3-4). However, neither of the sisters nor
Amparo was invited to act as an instrumental witness, much less
informed of the execution of the contracts at petitioner's house
which is merely one meter away from their house (TSN, Aug. 27,
1982, p. 18).
Fifth, there is no satisfactory showing that the consideration for

the sale of the lots was ever paid to Agapita Ferrer and
respondent Faustino Landingin. Where it is claimed that the
signature and thumbmark of the vendors were procured by the
vendees through fraud, undue influence and abuse of
confidence, a showing that valuable consideration passed hands
and that the vendors benefitted therefrom, may help erase any
thought that such sinister designs attended the transaction.
Indeed, all these facts and circumstances lend credence to the

claim that the sale of the subject lots and the execution of the
deeds of sale were done surreptitiously and in fraud of the
couple and their heirs (Aguinaldo v. Esteban, 135 SCRA 645

[1985]).
WHEREFORE, the decision of the Court of Appeals is AFFIRMED

and the petition is DENIED.
SO ORDERED.
Cruz, Davide, Jr., Quiason and Kapunan, JJ., concur.
Bellosillo, J., took no part.

329. Theis v. CA, 268 SCRA 167

FIRST DIVISION
[G.R. No. 126013. February 12, 1997]
SPOUSES HEINZRICH THEIS AND BETTY THEIS, petitioners, vs.

HONORABLE COURT OF APPEALS, HONORABLE ELEUTERIO
GUERRERO, ACTING PRESIDING JUDGE, BRANCH XVIII,
REGIONAL TRIAL COURT, TAGAYTAY CITY, CALSONS
DEVELOPMENT CORPORATION, respondents.
DECISION
HERMOSISIMA, JR., J.:
In the instant petition, we shall have the occasion to apply the

concept of mistake in the annulment of contracts.
Private respondent Calsons Development Corporation is the

owner of three (3) adjacent parcels of land covered by Transfer
Certificate of Title (TCT) Nos. 15515 (parcel no. 1 in the location
map), 15516 (parcel no. 2) and 15684 (parcel no. 3), with the area
of 1,000 square meters, 226 square meters and 1,000 square
meters, respectively. All three parcels of land are situated along
Ligaya Drive, Barangay Francisco, Tagaytay City. Adjacent to
parcel no. 3, which is the lot covered by TCT No. 15684, is a
vacant lot denominated as parcel no. 4.
In 1985, private respondent constructed a two-storey house on

parcel no. 3. The lots covered by TCT No. 15515 and TCT No.
15516, which are parcel no. 1 and parcel no. 2, respectively,
remained idle.
However, in a survey conducted in 1985, parcel no. 3, where the

two-storey house stands, was erroneously indicated to be
covered not by TCT No. 15684 but by TCT No. 15515, while the
two idle lands (parcel nos. 1 and 2) were mistakenly surveyed to
be located on parcel no. 4 instead (which was not owned by
private respondent) and covered by TCT Nos. 15516 and 15684.
On October 26, 1987, unaware of the mistake by which private

respondent appeared to be the owner of parcel no. 4 as indicated
in the erroneous survey, and based on the erroneous information
given by the surveyor that parcel no. 4 is covered by TCT No.
15516 and 15684, private respondent, through its authorized
representative, one Atty. Tarcisio S. Calilung, sold said parcel no.
4 to petitioners.
Upon execution of the Deed of Sale, private respondent delivered

TCT Nos. 15516 and 15684 to petitioners who, on October 28,
1987, immediately registered the same with the Registry of
Deeds of Tagaytay City. Thus, TCT Nos. 17041 and 17042 in the
names of the petitioners were issued.
Indicated on the Deed of Sale as purchase price was the amount

of P130,000.00. The actual price agreed upon and paid, however,
was P486,000.00. This amount was not immediately paid to
private respondent; rather, it was deposited in escrow in an
interest-bearing account in its favor with the United Coconut
Planters Bank in Makati City. The P486,000.00 in escrow was
released to, and received by, private respondent on December 4,
1987.
Thereafter, petitioners did not immediately occupy and take

possession of the two (2) idle parcels of land purchased from
private respondent. Instead, petitioners went to Germany.
In the early part of 1990, petitioners returned to the Philippines.

When they went to Tagaytay to look over the vacant lots and to
plan the construction of their house thereon, they discovered
that parcel no. 4 was owned by another person. They also
discovered that the lots actually sold to them were parcel nos. 2
and 3 covered by TCT Nos. 15516 and 15684, respectively. Parcel
no. 3, however, could not have been sold to the petitioners by the
private respondents as a two-storey house, the construction cost
of which far exceeded the price paid by the petitioners, had
already been built thereon even prior to the execution of the
contract between the disputing parties.
Petitioners insisted that they wanted parcel no. 4, which is the

idle lot adjacent to parcel no. 3, and persisted in claiming that it
was parcel no. 4 that private respondent sold to them. However,
private respondent could not have possibly sold the same to
them for it did not own parcel no. 4 in the first place.
The mistake in the identity of the lots is traceable to the

erroneous survey conducted in 1985.
To remedy the mistake, private respondent offered parcel nos. 1

and 2 covered by TCT Nos. 15515 and 15516, respectively, as
these two were precisely the two vacant lots which private
respondent owned and intended to sell when it entered into the
transaction with petitioners. Petitioners adamantly rejected the

good faith offer. They refused to yield to reason and insisted on
taking parcel no. 3, covered by TCT No. 155864 and upon which
a two-storey house stands, in addition to parcel no. 2, covered by
TCT No. 15516, on the ground that these TCTs have already been
cancelled and new ones issued in their name.
Such refusal of petitioners prompted private respondent to make

another offer, this time, the return of an amount double the price
paid by petitioners. Petitioners still refused and stubbornly
insisted in their stand.
Private respondent was then compelled to file an action for

annulment of deed of sale and reconveyance of the properties
subject thereof[1] in the Regional Trial Court.[2]
The trial court rendered judgment in favor of private

respondent. Identifying the core issue in the instant controversy
to be the voidability of the contract of sale between petitioners
and private respondent on the ground of mistake, the trial court
annulled said contract of sale after finding that there was indeed
a mistake in the identification of the parcels of land intended to
be the subject matter of said sale. The trial court ratiocinated:
"Meeting head-on the issue of alleged mistake in the object of the

same, defendants in their answer averred that they relied on the
technical descriptions of TCT Nos. 15516 and 15684 appearing
in the deed of sale x x x
A resolution of the conflicting claims of the parties to the instant

controversy calls for an inquiry on their real intent relative to the
identity of the parcels which plaintiff intended to sell to
defendants and which the latter in turn, intended to buy from
the former. For, the Court cannot ignore the dictates of logic and
common sense which, ordinarily, could not push a person to sell
to another, a property which the former does not own in the first
place, for fear of adverse consequences. The vendee, following
the same reasoning, would not buy a thing unless he is totally
certain that the seller is the real owner of the thing offered for
sale. It is equally true that when one sells or buys a real property,
he either sells or buys the property as he sees it, in its actual
setting and by its physical metes and bounds, and not be the
mere lot number assigned to the same property in the certificate
of title or in any document. And, when a buyer of real property
decides to purchase from his seller, he is ordinarily bound by
prudence to ascertain the true nature, identity or character of
the property that he intends to buy and ascertain the title of his
vendor before he parts with his money. It is quite obvious that
the foregoing precepts and precautions were observed by the
parties in the case at bar as there is no question at all that the
sale in question was consummated through the initiative of Mrs.
Gloria Contreras and then Vice-Mayor Benjamin Erni x x x both
brokers of the sale who, after a chance meeting with defendants
at the Taal Vista Lodge Hotel prior to the sale of plaintiff's
parcels, brought defendants to the vicinity where plaintiff's three
(3) adjacent parcels of land are located and pointed to
defendants the two (2) vacant parcels right beside plaintiff's
house. It is also undisputed that when defendants intimated to
the brokers their desire to buy the vacant lots pointed to them
when they visited the same place, they were brought to plaintiff's
representative, Tarcisio S. Calilung, at the latter's office in Makati
where the parties discussed the terms of the sale.
The Court notes further from the records that defendants' desire
to buy vacant lots from plaintiff is not only confirmed by the
testimony of Gloria Contreras and the ocular inspection
conducted by the court but by defendant Betty Theis herself
when the latter testified as follows:
'COURT:
Q. Why, what was the lot that you intended to buy?
A. The right side of the house, Your Honor.' (TSN of November 8,

1991, page 19)
Similarly, in answer to a question propounded to the same

defendant by their counsel, she stated that
'ATTY. ROSALES:
Q. In other words, the titles delivered to you were not the titles
covering the right side of the house?
A. No, sir.' (Ibid., page 20)
It is relevant to mention that when the defendants attempted to

take possession of the parcels of land they bought from the
plaintiff on which they intended to construct their house after

their return from a foreign sojourn, they admittedly wanted to
take that vacant area, which as herein shown, turns out to be a
property not owned by plaintiff. From this act of the defendants,
a clear meaning is shown. Defendants themselves, knew right
from the beginning that what they intended to buy was that
vacant lot, not the lot where plaintiff's house stands, covered by
TCT No. 15684 which was wrongly mentioned as one of the
objects of the sale. x x x
The fact that the Deed of Sale subsequently executed by plaintiff

and the defendants on October 27, 1987 covers the parcel of land
where plaintiff's two-storey house was constructed will clearly
reflect a situation that is totally different from what defendants
had intended to buy from the plaintiff viz-a-viz [sic] the latter's
intention to sell its two (2) vacant lots to defendants.
Notwithstanding defendants' claim that it was not possible for
plaintiff's representative not to be familiar with its properties,
the acts and circumstances established in this case would clearly
show, and this Court is convinced, that the inclusion of the parcel
where plaintiff's house is constructed is solely attributable to a
mistake in the object of the sale between the parties. This
mistake, obviously, was made, on the part of plaintiff's
representative when the latter mistook the vacant lot situated on
the right side of plaintiff's house as its vacant parcels of land
when its vacant lots are actually situated on the left side of the
same house. Indeed, such mistake on plaintiff's part appears to
be tragic as it turned out later that the vacant lot on the right
side of plaintiff's house did not belong to plaintiff. Worse, is the
fact that what was conveyed to defendants under the deed of
sale was the parcel where plaintiff's house already stood at the
time of the sale. This, definitely, is not what the parties intended.
x x x Going by the facts established by defendants' evidence, it

is clear that defendants did not intend to buy the parcel of land
where plaintiff's house stood as defendant Betty Theis declared
in her testimony that they wanted to buy the parcel at the right
side of plaintiff's house where she and her husband would
construct their house (TSN of June 4, 1991, p. 56). Neither can
this Court accept the hypothesis that plaintiff intended to sell
that parcel where its house was already constructed for if this
was its true intention, it would not sell its two (2) lots at the price
of P486,000.00 which is way below the costs of its construction
of P1,500,000.00.
The law itself explicitly recognizes that consent of the parties is

one of the essential elements to the validity of the contract and
where consent is given through mistake, the validity of the
contractual relations between the parties is legally impaired.
As earlier stated, the facts obtaining in the case at bar

undoubtedly show that when defendants bought the properties
of plaintiff, they intended to buy the vacant lots owned by the
latter. As the sale that was finally consummated by the parties
had covered the parcel where plaintiff's house was constructed
even before the sale took place, this Court can safely assume that
the deed of sale executed by the parties did not truly express
their true intention. In other words, the mistake or error on the
subject of the sale in question appears to be substantial as the
object of the same transaction is different from that intended by
the parties. This fiasco could have been cured and the pain and
travails of this litigation avoided, had parties agreed to
reformation of the deed of sale. But, as shown by the sequence
of events occurring after the sale was consummated, and the

mistake was discovered, the defendants refused, insisting that
they wanted the vacant lots on the right side of plaintiff's house,
which was impossible for plaintiff to do, as said vacant lots were
not of its own dominion."[3] [Emphasis supplied]
Aggrieved by the decision of the trial court, petitioners sought

its reversal[4] from respondent Court of Appeals.[5] Respondent
court, however, did not find the appeal meritorious and
accordingly affirmed[6] the trial court decision. Ruled the
respondent appellate court:
"There is no doubt that when defendants-appellants attempted

to take physical possession of Parcel No. 4 in May, 1990, they
were prevented by the true owner thereof from taking
possession of said land. To clear the matter, plaintiff-appellee
hired a new surveyor who revealed in his survey that Parcel No.
4 is not included in plaintiff-appellee's Transfer Certificates of
Title from which said plaintiff-appellee mistakenly offered
defendants-appellants said Parcel No. 4. Realizing its mistake,
plaintiff-appellee offered defendants-appellants Parcels Nos. 1
and 2 under the same Transfer Certificates of Title or the
reimbursement of the purchase price in double amount. But
defendants-appellants insisted this time to acquire Parcel No. 3
wherein plaintiff-appellee had already a house, and was not the
object of the sale.
Said Parcel No. 3 cannot be the object of the sale between the
parties as plaintiff-appellee's house already stands in the said
area even before defendants-appellants had chosen Parcel No. 4
which was described to be on the right side of said plaintiff-
appellee's house in Parcel No. 3. There is no dispute that

defendants-appellants wanted to buy Parcel No. 4 as testified to
by defendant-appellant Betty Theis, herself (p. 19, TSN, Nov. 8,
1991), which lot turned out to be outside of the Transfer
Certificates of Title of plaintiff-appellee. Defendants-appellants
cannot now insist on Parcel No. 3 as the same was not the object
of the sale between the parties.
Clearly, therefore, there was honest mistake on the part of

plaintiff-appellee in the sale of Parcel No. 4 to defendants-
appellants which plaintiff-appellee tried to remedy by offering
defendants-appellants instead his Parcels Nos. 1 or 2, or
reimbursement of the purchase price in double amount."[7]
[Emphasis ours]
We find that respondent court correctly affirmed the findings

and conclusions of the trial court in annulling the deed of sale
as the former are supported by evidence and the latter are in
accordance with existing law and jurisprudence.
Art. 1390 of the New Civil Code provides:
"Art. 1390. The following contracts are voidable or annullable,

even though there may have been no damage to the contracting
parties:
(1) x x x
(2) Those where the consent is vitiated by mistake, violence,

intimidation, undue influence, or fraud.
x x x"
In the case at bar, the private respondent obviously committed

an honest mistake in selling parcel no. 4. As correctly noted by
the Court of Appeals, it is quite impossible for said private
respondent to sell the lot in question as the same is not owned
by it. The good faith of the private respondent is evident in the
fact that when the mistake was discovered, it immediately
offered two other vacant lots to the petitioners or to reimburse
them with twice the amount paid. That petitioners refused either
option left the private respondent with no other choice but to
file an action for the annulment of the deed of sale on the ground
of mistake. As enunciated in the case of Mariano vs. Court of
Appeals:[8]
"A contract may be annulled where the consent of one of the

contracting parties was procured by mistake, fraud,
intimidation, violence, or undue influence."
Art. 1331 of the New Civil Code provides for the situations
whereby mistake may invalidate consent. It states:
"Art. 1331. In order that mistake may invalidate consent, it

should refer to the substance of the thing which is the object of
the contract, or to those conditions which have principally
moved one or both parties to enter into the contract."
Tolentino[9] explains that the concept of error in this article

must include both ignorance, which is the absence of knowledge
with respect to a thing, and mistake properly speaking, which is
a wrong conception about said thing, or a belief in the existence
of some circumstance, fact, or event, which in reality does not
exist. In both cases, there is a lack of full and correct knowledge
about the thing. The mistake committed by the private
respondent in selling parcel no. 4 to the petitioners falls within
the second type. Verily, such mistake invalidated its consent and
as such, annulment of the deed of sale is proper.
The petitioners cannot be justified in their insistence that parcel

no. 3, upon which private respondent constructed a two-storey
house, be given to them in lieu of parcel no. 4. The cost of
construction in 1985 for the said house (P1,500,000.00) far
exceeds the amount paid by the petitioners to the private
respondent (P486,000.00). Moreover, the trial court, in
questioning private respondent's witness, Atty. Tarciso Calilung
(who is also its authorized representative) clarified that parcel
no. 4, the lot mistakenly sold, was a vacant lot:[10]
"COURT: What property did you point to them?
A. I pointed to parcel No. 4, as appearing in the sketch.
COURT: Parcel No. 4 is a vacant lot?
A. Yes, your Honor.

COURT: So, there was no house on that lot?
A. There was no house. There were pineapple crops existing on

the property.
COURT: So, you are telling the Court that the intended lot is
vacant lot or Parcel 4?
A. Yes, your Honor.
Thus, to allow the petitioners to take parcel no. 3 would be to

countenance unjust enrichment. Considering that petitioners
intended at the outset to purchase a vacant lot, their refusal to
accept the offer of the private respondent to give them two (2)
other vacant lots in exchange, as well as their insistence on parcel
no. 3, which is a house and lot, is manifestly unreasonable. As
held by this Court in the case of Security Bank and Trust
Company v. Court of Appeals[11]:
"Hence, to allow petitioner bank to acquire the constructed

building at a price far below its actual construction cost would
undoubtedly constitute unjust enrichment for the bank to the
prejudice of the private respondent. Such unjust enrichment, as
previously discussed, is not allowed by law."
WHEREFORE, the petition is hereby DISMISSED and the decision

of the Court Appeals in CA-G.R. 47000 dated May 31, 1996
AFFIRMED. Costs against the petitioner.
SO ORDERED
Padilla (Chairman), Bellosillo, Vitug, and Kapunan, JJ., concur.
[1] Civil Case No. TG-1167.
[2] Branch 18, Tagaytay City, Cavite.
[3] Decision of the RTC in Civil Case No. TG-1167 penned by

Judge Julieto P. Tabiolo and dated December 15, 1993, pp. 3-6,
Rollo, pp. 87-90.
[4] Petitioners' appeal was docketed as CA-G.R. CV No. 47000.
[5] Eighth Division.
[6] Decision promulgated on May 31, 1996 and penned by

Associate Justice Lourdes K. Tayao-Jaguros, with Associate
Justices Jaime M. Lantin and B.A. Adefuin-de la Cruz concurring,
Rollo, pp. 28-34.
[7] Id., pp. 6-7, Rollo, pp. 31-32.

[8] 220 SCRA 716 (1993).
[9] TOLENTINO, CIVIL CODE OF THE PHILIPPINES p. 476, Vol. 4

(1991 ed.)
[10] Rollo, pp. 109-110.
[11] 249 SCRA 206 (1995).

Voidable Contracts Cases

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Voidable Contracts Cases

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I. Voidable Contracts (Arts.

325. House International v. IAC, 151 SCRA 703

June 30, 1987

G.R. No. 75287

HOUSE INTERNATIONAL BUILDING TENANTS ASSOCIATION,

Petitioner House International Building Tenants Association, Inc.

of the mortgage and for failure of Ang to exercise his right of

As CENTERTOWN was not authorized by its Articles of

Thereafter, herein petitioner filed a complaint with the Regional

The court a quo * dismissed the complaint. Petitioner appealed

CV No. 02691. ** Petitioner filed a motion for reconsideration,

Section 2, Rule 3 of the Rules of Court provides:

Sec. 2. Parties in interest. Every action must be prosecuted

The real party in interest is the party who stands to be benefited

And, quoting from the Brief for the respondent-defendant GSIS,

civil effects because "its consideration is illicit and/or the object

Cited to support this assertion are provisions of the 1973

As bases for a declaration that the conditional sale between GSIS

P.D. No. 1517 which confers a preferential right to tenants of

The petitioners likewise invoke our ruling in Mataas na Lupa

P.D. 1517 in referring to the pre-emptive or redemptive right of

The main thrust of the petitioner's challenge on the validity of

We agree with the Court of Appeals that on this issue the

Art. 1397. The action for the annulment of contracts may be

Petitioner is neither a party nor a privy to the Deed of

From these legal provisions it is deduced that it is the interest

In the decision sought to be reviewed We agree with the Court of

The corollary issue is whether appellant has the personality to

instituted only by those who are thereby obliged principally or

WHEREFORE, the petition is DENIED, with costs against the

Fernan (Chairman), Gutierrez, Jr., Paras and Padilla, JJ., concur.

* Hon. Hector C. Fule, presiding.

** Penned by Justice Serafin Camillon with the concurrence of

326. Malabanan v. Gaw Ching, 181 SCRA 84

G.R. No. 74938-39 January 17, 1990

ANGELINA J. MALABANAN, petitioner,

G.R. No. L-75524-25 January 17, 1990

LEONIDA CHY SENOLOS, LEONARD CHAN and LEONSO CHY

Puruganan, Chato, Chato, Chato & Tan and Romero, Lagman,

Quiason, Makalintal, Barot & Torres for petitioners in 74938-39.

Limqueco & Macaraeg Law Office and Herminio T. Sugay for

Respondent Gaw Ching instituted two (2) cases against

The second case, Civil Case No. G.R. 82-6798, demanded

defendant Malabanan which he gave to his counsel who told him

Corporation (Exh. M). At a later period, plaintiff had to move out

As to plaintiffs claim for damages, he testified, that this was

On cross examination, plaintiff admitted that he received a letter

On redirect, plaintiff declared that after receiving the notice of

xxx xxx xxx

Another witness presented by plaintiff was Felix Tienzo, Actg.

xxx xxx xxx 1

On 10 August 1984, the trial court rendered a decision which

Respondent Gaw Ching went on appeal to the then Intermediate

for the indulgence in inequitous conduct to plaintiff-appellant's

that order of demolition was valid only if there are no more

In the instant Petitions for Certiorari, petitioners assail both the

We believe that the Petitions must be granted.

The firmly settled rule is that strangers to a contract cannot sue

Art. 1397. The action for the annulment of contracts may be

Art. 1311. Contracts take effect only between the parties,

xxx xxx xxx

As long ago as 1912, this Court in Ibanez v. Hongkong and

From these legal provisions it is deduced that it is the interest

Mr. Justice Torres went on to indicate a possible qualification to