Facts:

The case involves Jayson Dandan as the petitioner and Arfel Realty & Management Corp., Rafael Felix, and spouses Emerita and Carlito Sauro as respondents. The events leading to the case began on March 7, 1992, when Arfel Realty, represented by its president Rafael Felix, sold a parcel of land located in Barrio Pamplona, Las Piñas, Metro Manila, to Dandan for P320,000. This transaction was formalized through a Deed of Absolute Sale. However, the lot had previously been sold to the Sauros under a Contract to Sell, where they were to pay a total of P690,000, with a down payment of P345,000 and the remaining balance in installments. The Sauros claimed to have fully paid P799,601.59 but were denied the title due to alleged dishonored checks. Arfel Realty contended that the Sauros still owed P299,614.23.

On April 10, 1992, a Memorandum of Agreement was executed between Dandan and Arfel Realty, wherein Dandan agreed to assume all liabilities from the sale to the Sauros, there...

Facts:

1. Sale of the Property:
   On 7 March 1992, Arfel Realty & Management Corp. (Arfel Realty), represented by Rafael Felix, sold a parcel of land (Lot 3 Block 16, Barrio Pamplona, Las Piñas) to Jayson Dandan for P320,000.00, evidenced by a Deed of Absolute Sale.

2. Previous Contract with the Sauros:
   The same lot was previously subject to a Contract to Sell between Arfel Realty and spouses Emerita and Carlito Sauro (the Sauros). The Sauros claimed full payment of P799,601.59, but Arfel Realty alleged unpaid balances due to dishonored checks.

3. Memorandum of Agreement (MOA):
   On 10 April 1992, Arfel Realty and Dandan executed a Memorandum of Agreement (MOA), wherein Dandan agreed to assume liabilities arising from the Deed of Absolute Sale and hold Arfel Realty harmless from any suits.

4. Legal Proceedings:

   • The Sauros filed a complaint for specific performance against Arfel Realty before the Housing and Land Use Regulatory Board (HLURB).
   • Arfel Realty filed a third-party complaint against Dandan, seeking indemnification for any liability to the Sauros.
   • The HLURB ruled in favor of the Sauros, ordering Arfel Realty to refund their payments and holding Dandan liable under the MOA.
   • The Office of the President (OP) later reversed the HLURB’s decision regarding Dandan, nullifying the MOA for lack of consideration.
   • The Court of Appeals reinstated the HLURB’s decision, upholding the validity of the MOA.

5. Compromise Settlement:
   During the appeal, Arfel Realty and the Sauros entered into a compromise settlement, with Arfel Realty acknowledging its liability to the Sauros but maintaining its claim against Dandan.

Issue:

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Ruling:

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Ratio:

1. Validity of the MOA:
   The MOA is a valid contract as it meets the requisites of a contract under Article 1318 of the Civil Code: (a) consent of the parties, (b) a certain object, and (c) a lawful cause or consideration.

2. Consideration:
   The consideration for the MOA was Dandan’s advantage of paying only the remaining balance due under the previous contract with the Sauros. This benefit constituted sufficient consideration to support the MOA.

3. Consent:
   Dandan’s claim that he signed the MOA without understanding its legal implications was rejected. The MOA explicitly stated that Dandan was aware of the previous transaction with the Sauros, and his signature on the notarized document carries a presumption of regularity and informed consent.

4. Presumption of Regularity:
   As a notarized document, the MOA enjoys the presumption of regularity and due execution. Dandan failed to rebut this presumption.

5. Mistake of Law:
   Dandan’s alleged mistake regarding the legal implications of the MOA does not vitiate consent. Mistake of law, as a rule, does not invalidate a contract unless it pertains to the substance of the agreement or the conditions that motivated the parties to enter into it.

6. Binding Effect of Contracts:
   Courts cannot relieve parties from the consequences of their contractual obligations, even if such obligations prove to be financially disadvantageous. Dandan is bound by the terms of the MOA and its legal consequences.

Conclusion:

The Supreme Court upheld the validity of the MOA, ruling that Dandan is bound by its terms and must assume the liabilities specified therein. The MOA was supported by valid consideration, and Dandan’s consent was not vitiated by mistake or lack of understanding. The Court emphasized the binding nature of contracts and the presumption of regularity accorded to notarized documents.