MENDOZA v.
OZAMIZ incapacitated to contract merely because
Facts: Petitioners allege that they are the
owners of three parcels of land in Cebu City, the
Deed of Sale thereto dated April 28, 1989 was
executed in their favor by Carmen Ozamiz for
and in consideration of the sum of
P1,040,000.00.
However, Carmen Ozamiz was, starting on July
1987, allegedly became an invalid and “could no
longer take care of herself or manage her
properties by reason of her failing health, weak
,mind and absent-mindedness” as alleged in the
special proceeding for guardianship filed by her
nephews 0n January 15, 1991.
The guardianship was granted and in the
course of the inventory of Carmen’s properties,
the properties covered by the Deed of Sale were
included as properties of Carmen.
ISSUE: is the Deed simulated
RULING: No.
- Simulation is defined as the declaration
of a fictitious will, deliberately made by
agreement of the parties, in order to
produce, for the purposes of deception,
the appearances of a juridical act which
does not exist or is different from what
that which was really executed.
- The requisites of simulation are: (a) an
outward declaration of will different
from the will of the parties; (b) the false
appearance must have been intended by
mutual agreement; and (c) the purpose
is to deceive third persons. None of
these were clearly shown to exist in the
case at bar.
- A simulated contract cannot be inferred
from the non-production of the checks.
The Deed of Sale, being a notarized
document, has in its favor the
presumption of regularity and the
burden of proof of irregularity is on the
persons alleging it. Whosoever alleges
the fraud or invalidity of a notarized
document has the burden of proving the
same by evidence that is clear,
convincing and more than merely
preponderant. The respondents failed to
do so.
- In the case of Carmen’s mental capacity,
it has been held that a person is not
of advanced years or by reason of
physical infirmities. Only when such age
or infirmities impair her mental faculties
to such extent as to prevent her from
properly, intelligently, and fairly
protecting her property rights, is she
considered incapacitated.The
respondents utterly failed to show
adequate proof that at the time of the
sale on April 28, 1989 Carmen Ozamiz
had allegedly lost control of her mental
faculties.
- Hence, absent the showing that the
contract was simulated, the petition is
deemed meritorious and the decision of
the trial court is deemed reinstated.
AYALA CORP v. CA
Facts: Article 73; Philippine Blooming Mills
loan from petitioner Ayala Investment. As an
added security for the credit line
extended to PBM, respondent Alfredo Ching
Exec. VP, executed security agreements and
making himself jointly and severally
answerable with PBM’s indebtedness to Ayala
Investments. PBM failed to pay the loan. Thus,
Ayala Investments filed a case for sum of money
against PBM and Alfredo Ching. The lower court
issued a writ of execution of pending appeal.
Thereafter, deputy sheriff Magsajo caused
issuance and service upon respondents-spouses
of a notice of sheriff sale on three of their
conjugal properties. Private respondents,
spouses Ching, filed a case of injunction against
petitioners alleging that petitioners cannot
enforce the judgment against conjugal
partnership levied on the ground that the
subject loan did not redound to the benefit of
the said conjugal partnership. Upon application
of private respondents, the lower court issued a
temporary restraining order to prevent
Magsajo from proceeding with the enforcement
of the writ of execution and with the sale of the
said properties at public auction.
ISSUE: Is the transaction prohibited?
RULING: No. The loan procured from AIDC was
for the advancement and benefit of PBM and
not for the benefit of the conjugal partnership
of Ching. Furthermore, AIDC failed to prove
that Ching contracted the debt for the benefit of
the conjugal partnership of gains. PBM has a
personality distinct and separate from the
family of Ching despite the fact that they
happened to be stockholders of said corporate
entity. Clearly, the debt was a corporate debt
and right of recourse to Ching as surety is only
to the extent of his corporate stockholdings.
Based from the foregoing jurisprudential
rulings of the court, “if the money or services
are given to another person or entity, and the
husband acted only as a surety or guarantor,
that contract cannot, by itself, alone be
categorized as falling within the context of
obligations for the benefit of the conjugal
partnership”. The contract of loan or services is
clearly for the benefit of the principal debtor
and not for the surety or his family. Ching only
signed as a surety for the loan contracted with
AIDC in behalf of PBM. Signing as a surety is
certainly not an exercise of an industry or
profession, it is not embarking in a
business. Hence, the conjugal partnership
should not be made liable for the surety
agreement which was clearly for the benefit of
PBM.
The court did not support the contention of the
petitioner that a benefit for the family may have
resulted when the guarantee was in favor of
Ching’s employment (prolonged tenure,
appreciation of shares of stocks, prestige
enhanced) since the benefits contemplated in
Art. 161 of the Civil Code must be one directly
resulting from the loan. It must not be a mere
by product or a spin off of the loan itself.
DELA CRUZ v. DELA CRUZ
Facts: Estrella, the plaintiff, and Severino, the
defendant were married in Bacolod and
begotten 6 children. During their coverture,
they acquired several parcels of land and were
engage in various businesses. The plaintiff filed
an action against her husband for the
separation of their properties. She further
alleged that her husband aside from
abandoning her, also mismanaged their
conjugal properties. On the other hand,
Severino contended that he had always visited
the conjugal home and had provided support
for the family despite his frequent absences
when he was in Manila to supervise the
expansion of their business. Since 1955, he had
not slept in the conjugal dwelling instead
stayed in his office at Texboard Factory
although he paid short visits in the conjugal
home, which was affirmed by Estrella. The
latter suspected that her husband had a
mistress named Nenita Hernandez, hence, the
urgency of the separation of property for the
fear that her husband might squander and
dispose the conjugal assets in favor of the
concubine.
ISSUE: Is there an abuse of authority on the
part of the husband?
RULING: The husband has never desisted in the
fulfillment of his marital obligations and
support of the family. To be legally declared as
to have abandoned the conjugal home, one
must have willfully and with intention of not
coming back and perpetual separation. There
must be real abandonment and not mere
separation. In fact, the husband never failed to
give monthly financial support as admitted by
the wife. This negates the intention of coming
home to the conjugal abode. The plaintiff even
testified that the husband “paid short visits”
implying more than one visit. Likewise, as
testified by the manager of one of their
businesses, the wife has been drawing a
monthly allowance of P1,000-1,500 that was
given personally by the defendant or the
witness himself.
SC held that lower court erred in holding that
mere refusal or failure of the husband as
administrator of the conjugal partnership to
inform the wife of the progress of the business
constitutes abuse of administration. In order
for abuse to exist, there must be a willful and
utter disregard of the interest of the
partnership evidenced by a repetition of
deliberate acts or omissions prejudicial to the
latter.
NAVARRO v. PLANTERS DEVT BANK
Facts: Spouses Jorge and Carmelita Navarra
obtained loan of 1.2 M from Planters
Bank. They mortagaged 5 LOTS for security.
Couple failed to pay, so the bank foreclosed on
the mortgage and sold it for more than 1.3 M.
Bank was highest bidder. 1 year redemption
expired w/o it having been redeemed by
couple. RRRC Development Corporation on the
other hand, a real estate company owned by the
parents of Carmelita, obtained a loan with the
same bank. They also mortgaged a certain
property as security. They also failed to pay and
the mortgaged assets was foreclosed. BUT they
were able to negotiate with the bank by way of
concession. Eventually, the foreclosed
properties of RRRC were sold to third persons
whose payments were directly made to the
Bank, were in excess by P300,000.00 for the
redemption price. In July 1985 - Back to the
spouses, Jorge sent a letter to the bank
proposing to repurchase the said 5 LOTS
previously foreclosed. In response, Planters
Bank, thru its Vice-President wrote back
Navarra via a letter agreeing to the request and
telling him to see the Head of the bank’s
Acquired Assets Unit for the details of the
transaction so that they may work on the
necessary documentation.
In August 1985 - Jorge went to see the Head
with a letter requesting that the excess
payment ofP300,000.00 in connection with the
redemption made by the RRRC be applied as
down payment for the Navarras’ repurchase of
their foreclosed properties but because the
amount of P300,000.00 was sourced from a
different transaction between RRRC and
Planters Bank and involved different debtors,
the Bank required Navarra to submit a board
resolution from RRRC authorizing him to
negotiate for and its behalf and empowering
him to use the amount
In Jan 1987 - Planters Bank sent a letter to Jorge
Navarra informing him that it could not
proceed with the documentation of the
proposed repurchase of the foreclosed
properties on account of his non- compliance
with the Bank’s request for the submission of
the needed board resolution of RRRC. Navarra
claimed having already delivered copies of the
required board resolution to the Bank. The
Bank, however, did not receive said copies.
In June 1987 - Navarras filed their complaint
for Specific Performance against bank. Planters
Bank asserted however that there was no
perfected contract of sale because the terms
and conditions for the repurchase have not yet
been agreed upon RTC ruled for the Navarra
spouses and said there was perfected Contract
of Sal.
The CA reversed the trial court ruling
iSSUE: Is there a perfected contract of Sale?
RULING: None. Navarras assert that the
following exchange of correspondence between
them and Planters Bank constitutes the offer
and acceptance. The July 1985 letter being the
offer from Navarra and the Aug 1985 letter-
reply from the Bank the acceptance. BUT SUCH
WERE NOT “CERTAIN OFFER” and “ABSOLUTE
ACCEPTANCE”.
While the foregoing letters indicate the amount
of P300,000.00 as down payment, they are,
however, completely silent as to how the
succeeding installment payments shall be
made. At most, the letters merely acknowledge
that the down payment of P300,000.00 was
agreed upon by the parties. However, this fact
cannot lead to the conclusion that a contract of
sale had been perfected. Quite recently, this
Court held that before a valid and binding
contract of sale can exist, the manner of
payment of the purchase price must first be
established since the agreement on the manner
of payment goes into the price such that a
disagreement on the manner of payment is
tantamount to a failure to agree on the price.
Navarras’ letter/offer failed to specify a definite
amount of the purchase price for the
sale/repurchase of the subject properties. It
merely stated that the "purchase price will be
based on the redemption value plus accrued
interest at the prevailing rate up to the date of
the sales contract." The ambiguity of this
statement only bolsters the uncertainty of the
Navarras’ so-called "offer" for it leaves much
rooms for such questions.
Also not clear insofar as concerned the exact
number of years that will comprise the long-
term payment scheme. As we see it, the absence
of a stipulated period within which the
repurchase price shall be paid all the more adds
to the indefiniteness of the Navarras’ offer.

Further, the tenor of Planters Bank’s letter-

reply negates the contention of the Navarras
that the Bank fully accepted their offer. The
letter specifically stated that there is a need to
negotiate on the other details of the transaction
before the sale may be formalized. Such
statement in the Bank’s letter clearly manifests
lack of agreement between the parties as to the
terms of the purported contract of
sale/repurchase, particularly the mode of
payment of the purchase price and the period
for its payment. The law requires acceptance to
be absolute and unqualified.

ARROGANTE v. DELIATER
Facts: