ONG CHUA vs. EDWARD CARR, ET AL.

,
(G.R. No. L-29512, January 17, 1929)

FACTS: This is an appeal by the defendants from a decision of the Court of First
Instance of Zamboanga ordering the reformation of the deed of sale executed by
the plaintiff in favor of Edward Carr for 3 lots.
When Carr went to Zamboanga, he was advised by a lawyer, P. J. Moore to
purchase the subject lots from petitioner at P20,000. The lots were previously
owned by spouses Henry E. Teck and Magdalena Lim, from whom, Chua acquired
the same.
Carr, Moore, and Chua, all agreed that Carr should respect the right Teck and
Lim to repurchase the lots, that would expire in June, 1927.
The first deed of sale drawn by Moore embodies the right of repurchase. Carr
and Chua even delivered to Moore, copies of the documents under which Teck and
Lim acquired such right.
But upon the drafting of the deed, Carr had no sufficient money to buy the
lots, so he asked that a loan in his favor in the amount of P6,500 be obtained on the
Zamboanga Mutual Building and Loan Association where Moore was the secretary.
Carr and Moore agreed to remove the right of repurchase from the deed of
sale since the loan can only be obtained if it appears that Carr is the absolute
owner. But Carr was to bear in mind that the rights of Teck and Lim still existed.
They told Chua that the right to repurchase by Lim and Teck is protected.
They also agreed that Moore should keep the deed and other documents until
the expiration of the right of repurchase.
The deed was prepared and signed. But then the loan from the Zamboanga
bank did not push through because Chua obtained a loan from BPI at a lower
interest rate. However, the deed was never re-drafted to contain the right of
repurchase.
Moore kept the documents, but when he became sick, Carr forced him to
deliver the same to him, so the former did, after being molested by Carr.
Carr immediately registered the deed.
Teck offered to repurchase the property in question from Ong Chua who
thereupon demanded of Carr the reconveyance of the property. The latter refused to
do so, claiming absolute title to the property.
Chua brought an action for reformation, alleging the abovementioned facts
and that the instrument be reformed in accordance therewith.
In his answer, the defendant pleaded that the deed in question contained no
stipulation as to rights of repurchase.
Carr died, and the administrator of his estate, Manuel Igual, was substituted
as defendant.
The court below ordered the reformation of the deed, Exhibit A, in accordance
with the plaintiff's demand, having received no evidence from the defendant.

ISSUES:
1. Whether Chua should be permitted to testify, over the defendant's
objections, to fact occurring prior to the death of Carr

2. Whether the facts proven do not justify the reformation of the deed in
question.
RULING:
1. Yes. The rule prohibiting parties to an action against an executor
or administrator, or any representative of the deceased person,
upon a claim or demand against the deceased, from testifying as
to any matter of fact occurring before the latters death was
never intended to serve as a shield for fraud.

In this case a number of credible witnesses testified to facts which

conclusively showed that Carr's conduct was tainted with fraud. The plaintiff did not
take the witness stand until after the existence of fraud on the part of Carr and been
established beyond a doubt and not by a mere preponderance of evidence. In these
circumstances, we cannot hold that the trial court erred in not excluding the
plaintiff's testimony.

2. Yes. The fraudulent act of Carr is ground for the reformation. The
same is given "where there is a mistake on one side and fraud or
unfair dealing on the other."

Evidence is conclusive that the plaintiff Chua had no clear conception of

the contents of the deed. The deed was written in the English language, with which
the plaintiff was unfamiliar, and he had to rely on the statements of Moore.
Carr, on the other hand, knew the contents of the deed and fully agreed to
Moore's plan to place it in escrow until the expiration of the term for the repurchase
or redemption of the land. Then he harassed Moore, then a very sick man, into
giving him possession of the deed prematurely. Thereafter, through fraud, he
presented to the register of deeds for the issuance of certificates of title.