Art. 1331 – When mistake may invalidate the contract.
Art. 1390 – Voidable contracts.
Petitioners – Heinzrich Theis
& Betty Theis
Respondents – CA, RTC & Calsons
Development Corp.
Facts:
·
Calsons
Development Corporation is the owner of three (3) adjacent parcels of land in Tagaytay
City. Adjacent to parcel no.3 is a vacant lot denominated as parcel no.4, which
was not owned by the CDC.
·
CDC
constructed a two-storey house on parcel no.3, while parcel no. 1 and parcel
no.2 remained idle.
·
However,
an erroneous survey indicated the interchange of Transfer Certificate of Titles
of the said properties, where parcel no.3 was erroneously located in parcel no.1
and the two idle lands in parcel.4.
·
Unaware
of the mistake, CDC sold to the Theis parcel no.4 through the Deed of Sale. Thereafter,
the Theis did not immediately occupy and take possession of the two (2) idle
parcels of land because they went to Germany.
·
They
went back to the Philippines and look over the vacant lots in Tagaytay to plan
the construction of their house thereon. But 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, where a two-storey house was constructed.
·
The
Theis insisted that they wanted parcel no. 4, but CDC argued that it could not
have possibly sold the same to them for it did not own parcel no. 4 in the
first place.
·
To
remedy the mistake, offered parcel nos. 1 and 2 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.
·
The
Theis rejected the good faith offer and refused to yield to reason, and
insisted on taking parcel no. 3 upon which a two-storey house stands, in
addition to parcel no. 2.
·
Such
refusal of the Theis prompted CDC to make another offer, i.e. the return of an
amount double the price paid by the former. But they still refused and
stubbornly insisted in their stand.
·
CDC
filed an action for annulment of deed of sale and reconveyance of the
properties subject thereof.
·
The
trial court rendered judgment in favor of CDC on the ground of mistake in the
identification of the parcels of land intended to be the subject matter of said
sale. The CA affirmed the said decision in toto.
Issue:
WoN a contract may be annulled where
the consent of one of the contracting parties was procured by mistake.
Held:
Yes,
the Court holds that where consent is given through mistake, the validity of
the contractual relations between the parties is legally impaired. Hence, the
contract can be annulled.
Under 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.
In the case at
bar, there is a lack of full and correct knowledge about the thing. The mistake
committed by the CDC in selling parcel no. 4 to the Theis falls within the said
provision. Verily, such mistake invalidated its consent and as such, annulment
of the deed of sale is proper.
“Art. 1390. The following contracts are voidable or
annullable, even though there may have been no damage to the contracting
parties:
(a) x x x
(b) Those where the
consent is vitiated by mistake, violence, intimidation, undue influence, or
fraud.
x x x”
In the case at bar, CDC
obviously committed an honest mistake in selling parcel no. 4. As correctly
noted by the Court of Appeals, it is quite impossible for CDC to sell the lot
in question as the same is not owned by it. The good faith of the CDC is
evident in the fact that when the mistake was discovered, it immediately
offered two other vacant lots to the Theis or to reimburse them with twice the
amount paid. That petitioners refused either option left the CDC with no other
choice but to file an action for the annulment of the deed of sale on the
ground of mistake.
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