G.R. No. 112212 March 2, 1998
GREGORIO FULE, petitioner, vs. COURT OF APPEALS, NINEVETCH CRUZ and JUAN BELARMINO, respondents.

FACTS

Petitioner Gregorio Fule, a banker and jeweler, owned a 10-hectare property in Tanay, Rizal. He sought to sell it and, through agents, found a buyer in respondent Dr. Ninevetch Cruz. Petitioner had previously expressed interest in buying Dr. Cruz’s pair of emerald-cut diamond earrings. Negotiations led to an agreement to barter the property for the jewelry, with a cash balance. To facilitate the sale, petitioner redeemed the property from a prior mortgage and had it sold to him. On October 24, 1984, a Deed of Absolute Sale for the property was executed at respondent Atty. Juan Belarmino’s residence, indicating a price of P80,000.00 to minimize taxes, though the actual agreed consideration was P200,000.00 (P160,000.00 for the jewelry and P40,000.00 in cash). Petitioner then went to the bank where Dr. Cruz retrieved the jewelry from a safety deposit box. Petitioner examined the jewelry under the bank lobby light for 10-15 minutes and, when asked if it was okay, nodded in satisfaction. Later that evening, petitioner went to Atty. Belarmino’s house claiming the jewelry was fake, demonstrated this with a tester, and subsequently filed a complaint seeking to nullify the contract of sale on grounds of fraud and deceit. The Regional Trial Court dismissed the complaint and awarded moral and exemplary damages and attorney’s fees to respondents. The Court of Appeals affirmed this decision.

ISSUE

Whether the contract of sale (barter) is null and void on the ground of fraud or deceit.

RULING

No. The contract is valid and binding. The Supreme Court affirmed the decisions of the lower courts. The elements of a valid contract were present: consent, determinate subject matter, and price certain. The Court found that Dr. Cruz delivered the genuine jewelry to petitioner, who, as an experienced jeweler, had a reasonable opportunity to examine it and expressed satisfaction. His failure to protest immediately and his delay of about two hours before complaining constituted an acceptance of the item as conforming to the contract. The claim of fraud was not substantiated. The contract was perfected upon delivery, and ownership of both the property and the jewelry was transferred. The awards of moral and exemplary damages and attorney’s fees to respondents were upheld, as the baseless filing of the suit caused them besmirched reputation, wounded feelings, and anxiety.