Annotation Courts Duties of Vigilance for the Protection of the Weak and the Ignorant

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308 SUPREME COURT REPORTS ANNOTATEDCourts Duties of Vigilance for the Protection of the Weak

and the Ignorant

A N N O T A T I O N

COURTS DUTIES OF VIGILANCE FOR THEPROTECTION OF THE WEAK AND THE IGNORANT

By JORGE R. COQUIA

*

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Source of Article 24 of the Civil Code, p. 309Legislative Intent of Article 24, p. 309Facts that Justified the Application of Article24 of the Civil Code in the Rongavilla Case, p.310Written Contracts as Law Between PartiesGeneral Rule, p. 310Exceptions to the General Rule, p. 312Contracts of Adhesion, p. 314

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Spouses Dolores and Narciso Rongavilla v. CA, G.R. No.83974, August 17, 1998, involved the simple case of sale ofa 131 square meter parcel of land between aunts, nephewsand nieces. The decision of the Supreme Court however,has far reaching effects on the responsibility of courts inrendering substantial justice to protect the weak, theignorant and the disadvantaged persons. It was a simplenotarized document which ordinarily should have beengiven full force and effect but was, nevertheless, declarednull and void by the Supreme Court applying Article 24 ofthe Civil Code which reads:

In all contractual property or other relations, when one of theparties is at a disadvantage on account of his moral dependence,ignorance, indigence, mental weakness, tender age or otherhandicap, the courts must be vigilant for his protection.

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* Member, Board of Editorial Consultants, Supreme Court ReportsAnnotated (SCRA).

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1. Source of Article 24 of the Civil Code

The Report of the Code Commission that drafted the CivilCode did not state the source although Arturo M.Tolentino, in his Commentaries on the Civil Code referredto a German, Mexican and Swiss Civil Codes whichcontains similar provisions. (Vol. I, p. 84)

Article 138 of the German Code provides: In particular,a juridical act is void whereby a person exploiting thedifficulties, indiscretion, or inexperience of another, causesto be promised or granted to him or to a third person for aconsideration, pecuniary advantages which exceed the valueof the consideration to such an extent that, having regard tothe consideration, the disproportion is manifest.

Article 21 of the Swiss Code of Obligations provides: Ifan obvious disproportion between performance andcounterperformance results from a contract which oneparty has caused to be entered into by exploiting thedistress, lightmindedness or inexperience of the other, thenthe victimized party may declare within a year from themaking of the contract that he is not bound by thecontract, and may demand restitution of any performancealready rendered.

Article 17 of the Mexican Code states: When a person,exploiting the gross ignorance, notorious inexperience orextreme distress of another, acquires an excessive advantagewhich is evidently disproportionate to his own prestation,

the party prejudiced shall have the right to ask for therescission of the contract, and, if this is impossible, for anequitable reduction of his obligation. (cited in Tolentino,Civil Code Annotated, pp. 8485)

2. Legislative Intent of Article

The law is intended to protect both found weak anduneducated who may have been taken advantage of byunscrupulous persons or those who may have used undueinfluence in entering into agreements. The GermanSupreme Court held: A contractual exemption of carriersfrom liability for damages occasioned to goods duringtransit, obtained, not by free

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agreements, but because a whole grip within a certaindistrict exploiting their own monopoly, force such exemptionupon those dependent upon their services, must beconsidered void as violative of the moral standards ofpeople whose thinking is just and equitable. (Tolentino, op.cit. p. 85) Articles 24 and 1332 are intended to protect thelaboring clan, many of whose members are in adisadvantageous situation. (Report of the CodeCommission, p. 24)

3. Facts that Justified the Application of Article 24 of the Civil Code in the Rongavilla Case

The facts found by the Regional Trial Court and affirmedby the Court of Appeals show that the private respondentswho were two aging spinsters, uneducated in English andknew only Tagalog and earned their livelihood asembroiderers (mambuburda) obtained a loan of P2,000.00from the petitioner, who are their nephews and nieces forthe repair of the roof of their old house. The respondentsthen were living in a house constructed on 1/2 parcel ofland consisting of 131 square meters.

A month later, petitioner Dolores Rongavilla, the

petitioner who granted the loan visited their aunts askingthem to sign a document written in English. Respondentsinquired what the document was all about and thepetitioner replied that it was just a document admittingtheir debt of P2,000.00, hence, the respondents signed it.

Four years later, petitioners asked the privaterespondents to vacate the land as they were already theowners of the land. In fact, the property was alreadyregistered in the names of the petitioners. It was only thenthat the poor spinsters learned that what they signed fouryears ago was a deed of sale of their property to thepetitioners.

4. Written Contracts as Law Between PartiesGeneral Rule

A contract has the force of law between the parties. (Lazov. Republic Society Insurance Co., Inc., 31 SCRA 329[1970]).

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The mere oral unsupported testimony of an interestedparty is not sufficient to overcome the legal presumption onthe regularity of the mortgage deed, a contract celebratedwith all the legal requirements under a safeguard ofnotarial certificate. (Ponce de Leon vs. RehabilitationFinance Corporation, 36 SCRA 289 [1970])

Obligations arising from contracts have the force of lawbetween the contracting parties and should be compliedwith in good faith. (Intestate Estate of the Late Ricardo P.Presbitero, Sr. vs. Court of Appeals, 217 SCRA 372 [1973])

In the interpretation of contracts it is the general rulethat if the terms thereof are clear as to the intention of theintention of the contracting parties, the literal meaning ofthe stipulations shall control. (Intestate Estate of the LateRicardo P. Presbitero, Sr. vs. Court of Appeals, 217 SCRA372 [1973])

Contracts are the law between the contracting parties.(Reta vs. National Labor Relations Commission, 232 SCRA

613 [1994])Though the notarization of a deed of sale rests in its

favor the presumption of regularity, it is not the intentionnor the function of the notary public to validate and makebinding an instrument never, in the first place, intended tohave any binding legal effect upon the parties thereto.(Suntay vs. Court of Appeals, 251 SCRA 430 [1995])

It is a cardinal rule in the interpretation of contractsthat if the terms of a contract are clear and leave nodoubt upon the intention of the contracting parties, theliteral meaning of its stipulations shall control. (Abella vs.Court of Appeals, 257 SCRA 482 [1996])

Weakness of mind caused by insanity is not a ground foravoiding a contract. (Cui vs. Cui, 100 Phil. 913)

Contracts which are the private laws of the contractingparties, should be fulfilled according to the literal sense oftheir stipulations, if their terms are clear and leave noroom for doubt as to the intention of the contractingparties. (Salvatiera vs. Court of Appeals, 261 SCRA 45[1996])

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Singing a contract without really knowing its contents,stipulations does not vitiate consent. (Manila Surety andFidelity Co., Inc. vs. Villarama, 107 Phil. 891)

5. Exceptions to the General Rule

Articles 24 and 1332 of the Civil Code and the principleson contracts of adhesion are exceptions to the generalrule. Article 1332 which supplements Article 24 of the CivilCode reads: When one of the parties is unable to read, or ifthe contract is in a language not understood by him andmistake or fraud is alleged, the person enforcing thecontract must show that the terms thereof have been fullyexplained to the former.

While the law or the courts cannot legally extend reliefto bad bargains to contractual relations unless there isactionable wrong as when consent is obtained by

intimidation (Art. 1335, Civil Code) or fraud (Art. 1338,Civil Code), courts should nevertheless be vigilant insafeguarding the rights of those who through no fault oftheir own need judicial protection as provided in Articles 24and 1332 of the Civil Code. (Padilla, Civil Law, Vol. V, p.105)

According to Article 1327 of the Civil Code,unemancipated minors cannot give consent to a contractand, in Article 24 and in all contractual, property or otherrelations, when one of the parties is at a disadvantage onaccount of x x x tender age x x x the courts must be vigilantfor his protection. (Ferrer, Jr. vs. Harvier, 5 CAR [20] 867)

This rule is necessary because unfortunately, there isstill a fairly large number of illiterates in this country, andthe documents are usually drawn up in English or Spanish.(Report of the Code Commission, p. 136)

Thus, where the insurer sought to avoid payment of alife insurance policy on the ground that the insuredconcealed or misrepresented her state of health, saidinsurer is not obliged to show that the English terms of thecontract were read and explained to the insured, aChinese, since that duty devolves

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on the ones, the beneficiaries who would like to enforce theinsurance agreement. (Tang vs. CA, 90 SCRA 236 [1979])

A contract may be annulled when the consent of one ofthe parties was procured by fraud, intimidation, violence orundue influence. (Theis vs. Court of Appeals, 268 SCRA167 [1997])

In Tang vs. CA, 90 SCRA 236, a 61year old illiteratewidow, who spoke only Chinese, was insured on October23, 1965 for P60,000.00, after answering that her state ofhealth was good, and for an additional P40,000.00 onNovember 28, 1965. She died on April 20, 1965 or less thansix months later, of lung cancer. The claim for insurancewas denied because of concealment. Arts. 24 and 1335were cited.

The trend not to consider the delay in filing a claim forworkmens compensation as nonjurisdictional defect is

justified by Art. 24. The employees inferiority visavis theemployer has always been a marked disadvantage. (CentralAzucarrera vs. WCC, 133 Phil. 539)

A 70year old widow who could not read nor writeEnglish and who was misled into signing a promissory notefor P3,000, aside from another note for P3,000 which sheintended to borrow from the bank, should be relieved of herobligation under the former note pursuant to Arts. 24 and1332. (Rural Bank of Caloocan, Inc. vs. Castro, 104 SCRA151 [1981])

When one of the parties is unable to read, or if thecontract is in a language not understood by him, andmistake or fraud is alleged, the person enforcing thecontract must show that the terms thereof have been fullyexplained to the former. (Lim vs. Court of Appeals, 229SCRA 616 [1994])

There is a need of protecting the workman whoseinferiority is marked by his disadvantage. (CentralAzucarrera Don Pedro v. WCC, 24 SCRA 484 [1968])

Where a party to a contract is illiterate, or cannot readnor understand the language in which the contract iswritten, the burden is on the party interested in enforcingthe contract to prove that the terms thereof are fullyexplained to the former in a language understood by him.(Cayabyab vs. Intermediate

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Appellate Court, 232 SCRA 1 [1994] Sales vs. Court ofAppeals, 211 SCRA 888 [1992] Heirs of Enrique Zambalesvs. Court of Appeals, 120 SCRA 897 [1983] Bunyi vs.Reyes, 39 SCRA 504 [1971] BPI Credit Corp. vs. Court ofAppeals, 204 SCRA 601 [1991])

The fact that a deed of sale is a notarized document doesnot necessarily justify the conclusion that the said sale isundoubtedly a true conveyance to which the parties theretoare irrevocably and undeniably bound. Conduct, to be givenjural effects, must be jural in its subject. (Suntay vs. Courtof Appeals, 251 SCRA 430 [1995])

Though the notarization of a deed of sale rests in itsfavor the presumption of regularity, it is not the intention

nor the function of the notary public to validate and makebinding an instrument never, in the first place, intended tohave any binding legal effect upon the parties thereto.(Suntay vs. Court of Appeals, 251 SCRA 430 [1995])

In situations like these, when a party imposes uponanother a readymade form of contract and the other isreduced to the alternative of taking it or leaving it, givingno room for negotiation and depriving the latter of theopportunity to bargain on equal footing, a contract ofadhesion results. While it is true that an adhesioncontract is not necessarily void, it must nevertheless beconstrued strictly against the one who drafted the same.(Ong Yiu vs. Court of Appeals, 91 SCRA 223 [1979] Saludovs. Court of Appeals, 207 SCRA 498 [1992])

The important task in contract interpretation is alwaysconsidered as a perfect contract to sell. (Adelfa Properties,Inc. vs. Court of Appeals, 240 SCRA 565 [1995])

In determining the real character of a contract, thetitle given to it by the parties is not as much significant asits substance. (Romero vs. Court of Appeals, 250 SCRA 223[1995])

6. Contracts of Adhesion

An adhesion contract is one wherein almost all theprovisions have been drafted only by one party, usually acorporation. It is called contract of adhesion because theonly partici

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pation of the other party is the affixing of his signature orhis adhesion thereto. Insurance contracts, bills oflading, contracts of sale of lots on installment plan, airlinetickets fall under this category. Contracts of adherencewhich the parties bargaining are not on equal footing, theweaker partys participation being reduced to thealternative to take it or leave it. (Qua vs. Law Union andRock Insurance Co., Inc., 98 Phil. 95)

Art. 24 has been applied to the socalled contracts of

adhesion which are printed agreement, like insurancepolicies and bills of lading, cunningly prepared bycorporations and which the other party may not change onewhit. He has no alternative but to take it or leave it. Theydiffer from contracts entered into by parties who bargainon an equal footing. They call for greater strictness andvigilance on the part of the courts with a view to protectingthe weaker party from abuses and imposition andpreventing them from becoming traps for the unwary. (QueChee Gan v. Law Union and Rock Insurance Co., 98 Phil.95 Fieldmans Insurance Co., Inc. v. Vargas Vda. DeSongco, 134 Phil. 90) A contract of insurance being acontract of adhesion, par excellence, any ambiguitytherein should be resolved against the insurer. (MalayanInsurance Corp. vs. Court of Appeals, 270 SCRA 242)

When a party imposes upon another a ready made form,and the other is reduced to the alternative of taking it orbearing it, giving no room for negotiation and depriving thelatter of the opportunity to bargain on equal footing, acontract of adhesion results. (Geraldez v. CA, 230 SCRA320 [1994])

The Supreme Court can take judicial notice of thepernicious practice involving contracts of adhesionentrapping innocent buyers through default clausesguaranteeing huge monetary windfalls for the developer inthe event their buyers fail to come up with certainrequirements. (Realty Exchange Ventures Corp. vs.Sendino, 233 SCRA 665 [1994])

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Any contract which appears to be heavily weighed in favorof one of the parties so as to lead to an unconscionableresult is void. (Almeda vs. Court of Appeals, 256 SCRA 292[1996])

In construing a written agreement, the reason behindand the circumstances surrounding its execution are ofparamount importance to place the interpreter in thesituation occupied by the parties concerned at the time thewriting was executed. (Cuizon vs. Court of Appeals, 260SCRA 645 [1996])

Elements of fraud vitiating consent for purposes ofannulling a contract are: (a) It was employed by acontracting party upon the other (b) It induced the otherparty to enter into the contract (c) It was serious and (d)It resulted in damages and injury to the party seekingannulment. (Constantino vs. Court of Appeals, 264 SCRA59 [1996])

Article 1332 supplements Article 24 of the Civil Codewhich provides that In all contractual, property or otherrelations, when one of the parties is at a disadvantage onaccount of his moral dependence, ignorance, indigence,mental weakness, tender age or other handicap, the courtmust be vigilant for his protection.

Considered in the light of the foregoing norms and inthe context of circumstances prevailing in the interislandshipping industry in the country today, We find and holdthat Condition No. 14 printed at the back of the passagetickets should be held as void and unenforceable for thefollowing reasonsfirst, under circumstances obtaining inthe interisland shipping industry, it is not just and fair tobind passengers to the terms of the conditions printed atthe back of the passage tickets, on which Condition No. 14is printed in fine letters, and second, Condition No. 14subverts the public policy on transfer of venue ofproceedings of this nature, since the same will prejudicerights and interests of innumerable passengers in differentparts of the country who, under Condition No. 14, will haveto file suits against petitioner only in the City of Cebu.(Sweet Lines vs. Teves, 83 SCRA 361 [1978])

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Annotation Courts Duties of Vigilance for the Protection of the Weak and the Ignorant

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