Sunday, April 28, 2019

Reyes v CA

G.R. No. 94214. December 1, 1992
Art. 1338 – Fraud.

Petitioners – Consuelo Reyes, Mario Francisco & Marila Berceño
Respondents – CA, Jose Ortañez & Angel Aseoche.

Facts:
·         The subject of this controversy is a 4-unit apartment building located at Sampaloc, Manila, owned by Jose Ortañez.
·         Ortañez leased separately the units to the three petitioners and Angel Aseoche.
·         In 1980, Ortañez offered to sell the building to the said lessees for P150,000.00 and gave them 30 days within which to reply. But only Reyes and Aseoche indicated their interest in purchasing the units they were respectively occupying. The other two petitioners did not respond.
·         Reyes did not pursue her intention to purchase her unit. Aseoche negotiated with Ortañez, and was offered the option to buy the entire building.
·         Thereafter, Aseoche notified the petitioners in writing that he was now the owner of the whole building. Later, he told them to vacate their respective units within 90 days because the premises would be occupied by his son, brother and sister.
·         The petitioners filed a complaint against Aseoche and Ortañez for Annulment of Title/ Sale with Damages, later amended to include a prayer for Specific Performance.
·         The trial court rendered its decision on their favor, but was reversed by the CA.
·         The petitioners asserted that the sale between Aseoche and Ortañez was tainted with fraud and bad faith, which called for nullification.

Issue:
          WoN the fraud that vitiates a contract invoked by the peitioners be the “fraud” contemplated by Art. 1338 of the Civil Code.

Held:
          No, the Court holds that the fraud or bad faith as a ground for nullifying the contract between Ortañez and Aseoche is NOT the fraud contemplated by the said provision because they are strangers to the contracting parties. Hence, the petitioners are not entitled to such invocation.
          Under Art. 1338, 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.
          In the case at bar, there was no evidence that Aseoche resorted to insidious words or machinations to induce Ortañez to enter into a contract with him, which constituted fraud. Moreover, the petitioners failed to establish that they authorized Aseoche to represent them in their negotiation. It is clear, however, that the petitioners decided to challenge the sale between the private respondents only because and after they were asked to vacate the subject property although they had not earlier manifested or pursued any interest in buying it when it was formally offered for sale to them.
          Thus, the petition is DENIED.

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