Professional Documents
Culture Documents
II. Contracts
II. Contracts
II. Contracts
A. In. General
1. Definition
Article 1305. A contract is a
meeting of minds between two
persons whereby one binds
himself, with respect to the
other, to give something or to
render some service.
Auto-contract
Article 1491. The following persons
cannot acquire by purchase, even at
a public or judicial auction, either in
person or through the mediation of
another:
(1) The guardian, the property of the
person or persons who may be under
his guardianship;
(2) Agents, the property whose
administration or sale may have
been intrusted to them, unless the
consent of the principal has been
given;
(3) Executors and administrators, the
property of the estate under
administration;
2. Elements of contracts
a. essential
b. natural
c. accidental
Batchelder vs CB
Facts:
Monetary Board Resolution No. 857
requires Filipino and American resident
contractors for constructions in U.S.
military bases in the Philippines to
surrender to the Central Bank their
dollar earnings under their respective
contracts but were entitled to utilize
90% of their surrendered dollars for
importation at the preferred rate of
commodities for use within or outside
Held:
Central Bank was intended to attain
basic objectives in the field of currency
and
finance.
It shall
be the
responsibility of the Central Bank of
the Philippines to administer the
monetary and banking system of the
Republic. It shall be the duty of the
Central Bank to use the powers
granted to it under this Act to achieve
the following objectives: (a) to
maintain monetary stability in the
Philippines; (b) to preserve the
international value of the peso and the
convertibility of the peso into other
freely convertible currencies; and (c) to
promote a rising level of production,
employment and real income in the
Philippines."
B. Fundamental
Characteristics/Principles of
contracts
1. Consensuality of contracts
Article 1305. A contract is a
meeting of minds between two
persons whereby one binds
himself, with respect to the
other, to give something or to
render some service.
Article 1317. No one may contract in
the name of another without being
Contract of Adhesion
Republic vs PLDT
Sometime in 1933, the
defendant PLDT entered into an
agreement with RCA
Communications Inc., an
American corporation, whereby
telephone messages coming
from the US and received by
RCAs domestic station, could
automatically be transferred to
the lines of PLDT, and vice
versa.
Issue
Whether or not the defendant
PLDT can be compelled to enter
into a contract with the plaintiff.
Held
My dear Marino:
When
I
decided
to
render
professional services in your case, I
was motivated by the value to me of
the very intimate relations which
you and I have enjoyed during the
past
many
years. It
was
nor
primarily, for a professional fee....
Sincerely yours,
Issue:
JUANING
Ratio:
The payment of attorney's fees
to respondent David may
be
justified by virtue of the
innominate contract
of facio ut
des (I do and you give which is
based on the principle
that
"no one shall unjustly enrich
himself at the expense of
another."
Ejercito et al vs Oriental
Assurance Corp.
Issue:
w/n petitioners are liable to
indemnify the respondent under
the deed of indemnity
considering that petitioners did
not give their consent to be
bound thereby beyond the one
(1) year effectivity period of the
original surety bond
Ratio.
2. Autonomy of contracts
Article 1306. The contracting
parties may establish such
stipulations, clauses, terms and
10
Issue:
Whether the Court of Appeals
erred in sustaining the validity
of the non-involvement clause
11
Held
In this case, the noninvolvement clause has a time
limit: two years from the time
petitioners employment with
respondent ends. It is also
limited as to trade, since it only
prohibits petitioner from
engaging in any pre-need
business akin to respondents.
More significantly, since
petitioner was the Senior
Assistant Vice-President and
Territorial Operations Head in
charge of respondents
Hongkong and Asean
operations, she had been privy
to confidential and highly
sensitive marketing strategies of
respondents business. To allow
her to engage in a rival business
soon after she leaves would
make respondents trade secrets
vulnerable especially in a highly
competitive marketing
environment. In sum, The Court
finds the non-involvement
clause not contrary to public
welfare and not greater than is
necessary to afford a fair and
reasonable protection to
respondent. Hence the restraint
12
Issue
Whether or not Emetrio Cui can
refund the P1,033.97 payment
for the scholarship grant
provided by Arellano University.
Held:
The memorandum of the
Director of Private Schools is not
a law where the provision set
therein was advisory and not
mandatory in nature. Moreover,
the stipulation in question,
asking previous students to pay
back the scholarship grant if
Saura vs Sindico
13
Held: YES.
Ratio:
Among those that may not be
the subject matter (object) of
contracts are certain rights of
individuals, which the law and
public policy have deemed wise
to exclude from the commerce
of man. Among them are the
political rights conferred upon
citizens, including, but not
limited to, once's right to vote,
the right to present one's
candidacy to the people and to
be voted to public office,
provided, however, that all the
qualifications prescribed by law
obtain. Such rights may not,
therefore, be bargained away
curtailed with impunity, for they
are conferred not for individual
or private benefit or advantage
but for the public good and
interest. Constitutional and
statutory provisions fix the
qualifications of persons who
may be eligible for certain
elective public offices. Said
requirements may neither be
enlarged nor reduced by mere
agreements between private
parties. A voter possessing all
the qualifications required to fill
14
Leal vs IAC
15
Issues
Whether or not it is quoted in
the Compraventa that the
private respondent has the right
of re-purchase.
Held:
The Resolution dated Sept. 27,
1983 was SET ASIDE and the
Decision promulgated on June
28, 1978 is Reinstated. The
annotations of the prohibition to
sell at the back of TCT Nos.
138837-138842 were cancelled
cost against respondent.
16
3. Mutuality of contracts
-Prohibition to sell the lots to
persons other than the vendor
(back of TCT) will be cancelled
or deleted since the prohibition
to alienate should not exceed 20
years otherwise there would be
subversion of public policy.
17
Acceleration clause
Escalation clause
Contending that CIRCULAR No.
18
Issues:
Held:
1. YES, it is valid.
19
Issue:
Florendo vs CA
Florendo was an employee of
Landbank of the Philippines
(LBP) from May 17, 1976 until
August 16, 1984 when she
voluntarily resigned. Before her
resignation, she applied for a
housing loan payable in 25
years from LBPs Provident
Fund. Both parties executed a
Housing Loan Agreement and
Held:
The increased rate imposed or
charged is not valid.
20
21
4. Obligatory force of
contracts
Article 1159. Obligations
arising from contracts have the
force of law between the
contracting parties and should
be complied with in good faith.
22
Issue
1. Whether AMA is liable to pay
six months worth of rent as
23
liquidated damages.
Held
1. YES, it is liable to pay 6
mos worth of rent as
liquidated damages.
24
5. Relativity of contracts
Article 1311. Contracts take effect
only between the parties, their assigns
and heirs, except in case where the
rights and obligations arising from the
contract are not transmissible by their
nature, or by stipulation or by
provision of law. The heir is not liable
beyond the value of the property he
received from the decedent.
25
FACTS:
Article 1177. The creditors, after
having pursued the property in
possession of the debtor to satisfy
their claims, may exercise all the rights
and bring all the actions of the latter
for the same purpose, save those
which are inherent in his person; they
may also impugn the acts which the
debtor may have done to defraud
them. (1111)
26
ISSUE:
WON petitioner
should be held soldarily
liable for the second credit
facility extended to
Booklight
.
RULING:
27
28
Issue:
WON novation extinguishes
criminal liability or WON the
execution of the debt settlement
agreement precluded MB from
holding respondents criminally
liable for estafa
Held:
No.
29
30
Issue:
Whether or not the petitioner is
subsidiarily liable to respondent
Abasolo
Held:
No. To a banking institution,
well-defined lending policies and
sound lending practices are
essential to perform its lending
function effectively and
minimize the risk inherent in
any extension. However, in the
absence of lender-borro
wer relationship between
petitioner and Abasolo, there is
no inherent obligationof
petitioner to release the
proceeds of the loan to her.
31
32
Issues:
(1) Whether or not the interest
imposed by ACFLC was
unconscionable and excessive;
(2) Whether or not the provision
in the real estate mortgage on
the mortgagors waiver of right
of redemption should be voided
for being against public policy;
and
(3) Whether or not the action for
annulment of mortgage was a
collateral attack on ACFLCs
certificate of title.
Held:
(1) It is true that parties to a
loan agreement have a wide
latitude to stipulate on any
interest rate in view of Central
Bank Circular No. 905, series of
1982, which suspended the
Usury Law ceiling on interest
rate effective 1 January 1983.
However, interest rates,
33
deprivation of property,
repulsive to the common sense
of man. It has no support in law,
in principles of justice, or in the
human conscience nor is there
any reason whatsoever which
may justify such imposition as
righteous and as one that may
be sustained within the sphere
of public or private morals.
34
Velasco vs CA
35
mortgage contracts).
Issue:
Held:
We so hold that even in equity alone,
GSIS should pay the petitioners. After
all, it admits it has not collected from
the ones who appear to be the buyers
thereof, albeit it must be collecting the
installments on the lots. All it has to do
then is to pass on to them what it has
to pay petitioners. In law, GSIS is,
under the peculiar circumstances of
this case, the owner of said houses.
Pursuant to Article 1729 of the Civil
Code:
Those who put their
labor upon or furnish
materials for a piece of
work undertaken by the
contractor have an
action against the owner
up to the amount owing
from the latter to the
contractor at the time
the claim is made.
However, the following
36
Kauffman vs PNB
1) Payments made by
the owner to the
contractor before they
are due;
2) Renunciation by the
contractor of any
amount due him from
the owner.
37
HELD YES
The only express provision of
law as bearing directly on this
question is the second
paragraph of article 1257 of the
38
>
During the effectivity of the
insurance contract, the car figured in
an accident.
The company then
assigned the accident to an insurance
appraiser
for
investigation
and
appraisal of the damage.
Issue:
Held:
NONE.
It is fundamental that contracts take
effect only between the parties
thereto, except in some specific
39
40
Florentino vs Encarnacion
41
issues
Whether the stipulation in
question is just an arrangement
stipulation or a grant revocable
at the unilateral option of the
co-owers.NO.
Ratio
- The stipulation on religious expenses is
not revocable at the unilateral option
of the co-owners and neither is it
binding only on the petitioners. It is
also binding on the oppositors
Salvador Sr., Salvador Jr., and Angel.
- The
stipulation
is
part
of
an
extrajudicial partition duly agreed
and signed by the parties, hence the
same must bind the contracting
parties thereto and its validity or
compliance cannot be left to the will
of one of them (NCC 1308). Under
NCC 1311, this stipulation takes
effect between the parties, their
assigns and heirs.
42
43
44
45
46
issue
Whether PH and Union have the
legal capacity to bring the suit
for specific performance based
on the charter party.
NO
Ratio
1st Issue:
Marimperia
Nope,
they
cant
sue
47
No liability if disinterested
advice. Liable if advice is
for indirect purpose of
benefiting defendant at
expense of plaintiff and
contract broken because
of the advice. (Doctrine
under Lumley v. Gye
48
requires interference by
unlawful means.)
HELD:
RATIO:
1st issue
ISSUES:
1. Whether a person who is
not a party to a contract for
the sale of land makes
himself liable for damages
to the vendee, beyond the
value
of
the
use
and
occupation,
by
colluding
with
the
vendor
and
maintaining him in the
effort to resist an action for
specific performance. NO
2. Whether the damages which
the plaintiff seeks to recover
under this head are too remote
and speculative to be the
subject of recovery. YES
49
50
accepted legal
standards. The idea thus
expressed is undoubtedly
broad enough to include
any rational conception of
liability for the tortious
acts likely to be developed
in any society.
Gilchrist vs Cuddy
FACTS:
1. Cuddy was the owner of the film
Zigomar, w/c he rented for a week to
Gilchrist for Php 125 on Apr. 24, 1913
and was to be delivered on May 26,
1913 (start of the said week).
4. An ex parte mandatory
injunction was then issued
directing Cuddy to send to
Gilchrist "Zigomar"
incompliance with an alleged
contract which had been
enteredinto between these two,
and at the same time an
exparte preliminary injunction
was issued restraining Espejo
and Zaldarriaga from receiving
and exhibiting in their
51
52
RULING:Judgment affirmed
RATIO:
Liability of Espejo and Zaldarriaga
Injunction as Remedy
1. The fact that the interference
with the Gilchrist contract was
53
54
documentary
stamps
were
not
contemplated under the indemnity
agreements to be a part of the
undertaking
of
the
guarantor
(Hemady), since they were not
liabilities incurred after the execution
of the counter-bonds; and
(2) Whatever losses may occur after
Hemady's death, are not chargeable to
his estate, because upon his death he
ceased to be guarantor. A requirement
to be a guarantor is his integrity, which
is not transmissible upon death.
issue
WONthe Estate of K.H. Hemady
is liable under the indemnity
agreements as surety after
death [YES]
ratio
While in our successional
system the responsibility of the
heirs for the debts of their
decedent cannot exceed the
value of the inheritance they
receive from him, the principle
remains intact that these heirs
succeed not only to the rights of
the deceased but also to his
obligations. Articles 774 and
776 expressly so provide,
thereby confirming Article 1311.
55
be expressly established, or
at the very least, clearly
inferable
from
the
provisions of the contract
itself, and the text of the
agreements
sued
upon
nowhere indicate that they
are non-transferable. Here,
there is no such stipulation.
Law:The provision makes
reference to those cases
where the law expresses
that the rights or obligations
are extinguished by death,
as is the case in legal
support
(Article
300),
parental authority (Article
327), usufruct (Article 603),
contracts for a piece of work
(Article 1726), partnership
(Article 1830 and agency
(Article 1919). By contract,
the articles of the Civil
Code
that
regulate
guaranty or suretyship
(Articles 2047 to 2084)
contain no provision that
the
guaranty
is
extinguished upon the
death of the guarantor
or the surety
2.
3.
4.
5.
6.
7.
So Pung Bun vs CA
1. 1963: Tek Hua Trading Co,
through its managing partner, So
Pek Giok, entered into lease
8.
56
C. Classification of Contracts
a. preparatory
57
Article 1868. By the contract of agency a person Simple loan may be gratuitous or with a stipulation
binds himself to render some service or to do
to pay interest.
something in representation or on behalf of another,
with the consent or authority of the latter.
b. principal
c. accessory
Article 1638. By the contract of barter or exchange
one of the parties binds himself to give one thing in
consideration of the other's promise to give another
thing.
Article 2047. By guaranty a person, called the
guarantor, binds himself to the creditor to fulfill the
obligation of the principal debtor in case the latter
should fail to do so.
Article 1642. The contract of lease may be of
things, or of work and service.
58
according to perfection
3.
59
stated in the following article cannot be exercised. Article 1933. By the contract of loan, one of the
parties delivers to another, either something not
consumable so that the latter may use the same for
a certain time and return it, in which case the
a. any form
contract is called a commodatum; or money or other
b. special form
consumable thing, upon the condition that the same
amount of the same kind and quality shall be paid,
in which case the contract is simply called a loan or
4. according to purpose
mutuum.
a. transfer of ownership
c. rendition of service
Article 1638. By the contract of barter or exchange
one of the parties binds himself to give one thing in
consideration of the other's promise to give another
Article 1642. The contract of lease may be of
thing.
things, or of work and service.
b.
conveyance of use
according to nature
produced
a. bilateral
of
obligation
60
onerous
unilateral
gratuitous or lucrative
61
b. right
Commodatum is essentially gratuitous.
c. service
c.
7.
remuneratory
according to risk
a. commutative
b. aleatory
8.
according to name
a. nominate
b. Innominate
Sanchez v. Rigos
June 14, 1972
62
sum
mar
y
issue
Whether or not it was a contract to buy and
sell. NO
ratio
The option did not impose the
obligation to purchase the property. It was
not a contract to buy and sell. It merely
granted Sanchez an option to buy. There
is nothing to indicate that the agreement is
supported by a consideration distinct from
the price stipulated for the sale of the land.
63
ANTONIO, concurring:
Agreed with the abandonment of
the Southwestern case which holds that an
option to sell can still be withdrawn, even if
2. Perfection
sum
mar
y
64
b.
Because of such
relationship, they entered
into contracts for repair
works without need of a
formal written contract.
c.
2.
3.
4.
d.
e.
65
a.
The PHP15,000
represented partial
payment of old accounts.
b.
c.
ii.
However, no
authorized
representative of
JULIANO came to
Zamboanga.
JULIANO only sent
several telegrams
demanding that
TONG repair the
vessel.
TONG advised
JULIANO again to
send its authorized
representative to
see the
deterioration
personally and to
sign the contract.
TONG insisted that
it had no contract
yet for the repair of
Zamboanga-J.
d.
5.
Issue/held/ratio
W/N there was a perfected contract
between TONG and JULIANO for the
repair of Zamboanga-J NO, there
was none.
66
requesting an immediate
downpayment.
and proximate
reason which
justifies the
creation of an
obligation thru the
will of the
contracting parties.
o
Cause is the
immediate, direct
67
Petition GRANTED.
Velasco v. CA
June 29, 1973
Facts:
Suit for specific performance filed by
Lorenzo Velasco against the Magdalena
Estate, Inc.
Plaintiffs Version
Payment terms:
Defendant:
o down payment: P10,000.00 and
P20,000.00
68
o P30,000.00
Ratio:
69
3. Performance
4. Consummation
Article 1322. An offer made through an agent is
accepted from the time acceptance is
70
Article 1327. The following cannot give consent to Article 1332. When one of the parties is unable to
a contract:
read, or if the contract is in a language not
understood by him, and mistake or fraud is alleged,
(1) Unemancipated minors;
the person enforcing the contract must show that
the terms thereof have been fully explained to the
(2) Insane or demented persons, and deaf-mutes
former. (n)
who do not know how to write. (1263a)
71
72
73
the guilt of the donor and donee may be proved by government-owned or controlled corporation, or
preponderance of evidence in the same action.
institution, the administration of which has been
intrusted to them; this provision shall apply to
judges and government experts who, in any manner
whatsoever, take part in the sale;
Article 1476. In the case of a sale by auction:
(5) Justices, judges, prosecuting attorneys, clerks of
superior and inferior courts, and other officers and
employees connected with the administration of
(4) Where notice has not been given that a sale by
justice, the property and rights in litigation or levied
auction is subject to a right to bid on behalf of the
upon an execution before the court within whose
seller, it shall not be lawful for the seller to bid
jurisdiction or territory they exercise their respective
himself or to employ or induce any person to bid at
functions; this prohibition includes the act of
such sale on his behalf or for the auctioneer, to
acquiring by assignment and shall apply to lawyers,
employ or induce any person to bid at such sale on
with respect to the property and rights which may be
behalf of the seller or knowingly to take any bid from
the object of any litigation in which they may take
the seller or any person employed by him. Any sale
part by virtue of their profession;
contravening this rule may be treated as fraudulent
by the buyer. (n)
(6) Any others specially disqualified by law.
Article 1490. The husband and the wife cannot sellArticle 1533. The seller is bound to exercise
property to each other, except:
reasonable care and judgment in making a resale,
and subject to this requirement may make a resale
(1) When a separation of property was agreed upon
either by public or private sale. He cannot, however,
in the marriage settlements; or
directly or indirectly buy the goods.
(2) When there has been a judicial separation of
property under article 191. (1458a)
Article 1646. The persons disqualified to buy
referred to in articles 1490 and 1491, are also
Article 1491. The following persons cannot acquiredisqualified to become lessees of the things
mentioned therein.
by purchase, even at a public or judicial auction,
either in person or through the mediation of another:
(1) The guardian, the property of the person or
persons who may be under his guardianship;
(2) Agents, the property whose administration or
sale may have been intrusted to them, unless the
consent of the principal has been given;
74
law.
These contracts cannot be ratified. Neither can the (1) By the marriage of the minor; or
right to set up the defense of illegality be waived.
(2) By the recording in the Civil Register of an
agreement in a public instrument executed by the
parent exercising parental authority and the minor at
FC, Art. 87. Every donation or grant of gratuitous least eighteen years of age. Such emancipation shall
advantage, direct or indirect, between the spouses be irrevocable.
during the marriage shall be void, except moderate
gifts which the spouses may give each other on the
occasion of any family rejoicing. The prohibition shall
also apply to persons living together as husband and
wife without a valid marriage.
Republic Act No. 6809
December 13, 1989
Art. 124. The administration and enjoyment of the
conjugal partnership shall belong to both spouses
jointly. In case of disagreement, the husband's
AN ACT LOWERING THE AGE OF
decision shall prevail, subject to recourse to the
MAJORITY FROM TWENTY-ONE TO
court by the wife for proper remedy, which must be
EIGHTEEN YEARS, AMENDING FOR
availed of within five years from the date of the
THE PURPOSE EXECUTIVE ORDER
contract implementing such decision.
NUMBERED TWO HUNDRED NINE,
AND FOR OTHER PURPOSES
Be it enacted by the Senate and House
In the event that one spouse is incapacitated or
of Representatives of the Philippines in
otherwise unable to participate in the administration of
Congress assembled::
the conjugal properties, the other spouse may assume
sole powers of administration. These powers do not
Section 1. Article 234 of Executive
include disposition or encumbrance without authority of
Order No. 209, the Family Code of the
the court or the written consent of the other spouse. In
Philippines, is hereby amended to read
the absence of such authority or consent, the
as follows:
disposition or encumbrance shall be void. However, the
transaction shall be construed as a continuing offer "Art.
on 234. Emancipation takes place by
the part of the consenting spouse and the third person,
the attainment of majority. Unless
and may be perfected as a binding contract upon the
otherwise provided, majority commences
acceptance by the other spouse or authorization by at
the
the age of eighteen years."
court before the offer is withdrawn by either or both
offerors.
Section 2. Articles 235 and 237 of the
same Code are hereby repealed.
Section 3. Article 236 of the same Code
Art. 234. Emancipation takes place by the
is also hereby amended to read as
attainment of majority. Unless otherwise provided, follows:
majority commences at the age of twenty-one years.
"Art. 236. Emancipation shall terminate
75
Cognition Theory
Manifestation Theory
76
Delivery
Due
observance
formalities
of
prescribed
77
78
HELD: Denied.
A. Simulated contract
CC defines a contract as a meeting of
minds between two persons whereby one
binds himself, with respect to the other, to
give something or to render some service.
Article 1318 provides that there is no
contract unless the following requisites
concur:
79
80
81
82
83
Absolute Sale.
Although on their face, the Deeds of
Absolute Sale appear to be supported by
valuable consideration, the RTC and the CA
found that there was no money involved in
the sale. The consideration in the Deeds of
Absolute Sale was superimposed on the
spaces therein, bearing a font type
different from that used in the rest of the
document. The lower courts also found that
the duplicate originals of the Deeds of
Absolute Sale bear a different entry with
regard to the price.
84
Facts:
Petitioner filed a complaint for a sum of
money
against
respondent
Makilito
Mahinay based on two separate loans
obtained
by
the
latter,
amounting
to P1,520,000.00 and P416,800.00, or a
total amount of P1,936,800.00. These loans
were evidenced by two promissory notes.
85
Held: Yes.
The promissory notes likewise required the
payment of a penalty charge of 3% per
month or 36% per annum. We find such
rates unconscionable. This Court has
recognized a penalty clause as an
accessory obligation which the parties
attach to a principal obligation for the
purpose of ensuring the performance
thereof by imposing on the debtor a special
prestation (generally consisting of the
payment of a sum of money) in case the
obligation is not fulfilled or is irregularly or
inadequately fulfilled. However, a penalty
charge
of
3%
per
month
is
unconscionable; hence, we reduce it to 1%
per month or 12% per annum, pursuant to
Article 1229 of the Civil Code which states:
86
FACTS:
1. On 26 Aug 1967, petitioner took a PAL
flight from Cebu to Butuan. He was
scheduled to attend a trial set for hearing
on 28-31 Aug. He checked in one maleta
containing documents needed for said trial.
Upon his arrival at the Bancasi airport, he
tried to claim his luggage, but it could not
be found. He claimed he was only attended
to after reacting indignantly, which was
denied by the porter clerk Gomez.
2. At 3 p.m., PAL Butuan sent a message to
PAL Cebu inquiring about the missing
luggage, which was relayed in full to the
Mactan Airport teletype operator at 3:45
p.m. At 3:59, PAL Manila wired PAL Cebu
advising that the luggage had been
overcarried to Manila, and would be
forwarded to Cebu on the same day.
Instructions were given that the luggage be
immediately forwarded to Butuan on the
first available flight. PAL Cebu messaged
PAL Butuan at 5 p.m., but PAL Butuan did
not receive this since all the personnel had
already left.
3. At 10 p.m., petitioner wired PAL Cebu
demanding delivery before noon next day,
otherwise, he would hold PAL liable for
damages. The PAL Cebu supervisor
received it but did not reply since he
assumed that the luggage had would have
already arrived by the time a reply would
reach Butuan.
4. Early next morning, petitioner went to
Bancasi airport to inquire about his
87
88
ISSUES:
Whether or not parties are bound by the
first proposal or by the second proposal?
Parties are bound by the second
proposal, Building Contract, as the
first proposal containing the provision
on commission was never perfected.
Subsequent payments were only made
after the signing of the second
proposal; thus it was the intention of
the parties to enforce such contract.
DECISION:
The first proposal is simply a proposal as it
was never perfected as a contract. Only an
absolute acceptance of a definite offer
manifests consent necessary to perfect a
contract. The mere payment of P10K was
not an unqualified acceptance of the offer
of the first proposal. The second proposal,
signed by the contracting parties, has
already been consummated when the
building was completed. Therefore, its
validity and binding effect cannot be
disputed by the contracting parties. The
subsequent payments made by Cancio only
after the signing of the Building Contract
prove that it was the second proposal that
was intended to be fulfilled. It cannot be
said that these amounts are mere
replenishments in accordance to the first
proposal. Since it is fully paid, there is no
basis for the petitioners demand for the
commission. To allow such payment would
be equivalent to changing the terms of the
89
ISSUE:
Whether the order of Judge Cloribel
compelling Nawasa to award the said
contract to petitioner was binding in the
part of Nawasa? No. Judge Cloribel did
not just act without jurisdiction but
refusal of Nawasa to grant the
contract to petitioner was likewise
DECISION:
Judge Cloribel acted without jurisdiction in
issuing his order thus the order is void.
Nawasa was likewise justified in not
awarding the contract to petitioner
because it had not tax clearance certificate
since it had a pending tax case in the BIR.
It is not the duty of Nawasa to award the
contract to petitioner even if it was the
lowest bidder, as according to its
Addendum no. 1 it reserved the right to
reject the bid of any bidder; thus, petitioner
has no cause to dispute the award as it was
rejected by Nawasa. Advertisements for
bidders are simply invitation to make
proposals and the advertiser is not bound
to accept the lowest or highest bidder
unless the contrary appears.
Facts:
> On Sept. 25, 2965, Lee Su Guat, widow,
61 years old and illiterate who spoke only
Chinese, applied for life insurance for 60T
with Philamlife. The application was in two
parts, both in English.
> The second part dealt with her state of
health. Her answers having shown that
she was health, Philamlife issued her a
policy effective Oct. 23, 1965 with her
90
Held: NO.
Art. 1332 is NOT applicable. Under said
article, the obligation to show that the
terms of the contract had been fully
explained to the party who is unable to
read or understand the language of the
contract, when fraud or mistake is alleged,
devolves on the party seeking
to enforce it. Here, the insurance
company is NOT seeking to enforce the
contract; on the contrary, it is seeking to
91
92
the rights.
ISSUE:
Whether the Deed of Sale of house and
Transfer of Right, on which petitioners have
based their application over the lot, is
simulated and therefore an inexistent deed
of sale? Yes. The inconsistencies in the
testimonies of petitioner regarding
the documents, failure to produce
receipts evidencing the payment to
LTA, absence of the name of the
petitioners as transferee of the rights
over the lot in the application filed
with LTA indicates that the agreement
was indeed simulated; therefore is
inexistent.
DECISION:
The parties knew that the Deed of Sale of
House and Transfer of Rights was fictitious
and simulated where none of the parties
intended to be bound thereby. First, the
testimony of petitioner during direct
examination was inconsistent with her
testimony before LTA (e.g. amount of
payment to Encabos, place of the signing
of the Deed); hence it shows that no actual
sale took place between the Encabos and
petitioners. Second, since petitioners could
not produce the receipts evidencing the
payment they made to LTA for the lots nor
the Agreement to sell indicates that the
agreement was indeed simulated. Third,
the names of the petitioner were never
mentioned as transferees in the two
application with the LTA filed by Encabo.
Fourth, the document was executed in
November 1958 while petitioners asked LTA
to approve the transfer of Encabos rights
only on 1960. Lastly, the petitioners were,
as admitted by Encabo and Quesada,
meant only to be dummies to protect the
money invested by Quesada to purchase
93
94
Ratio
95
1.
2.
96
right donated.
carrier; and
3) Reasonable, just and not contrary to public
policy.
Act 1147
Article 1744. A stipulation between the common
carrier and the shipper or owner limiting the liability
Section 22. No transfer of large cattle shall be valid
of the former for the loss, destruction, or
unless registered, and a certificate of transfer
deterioration of the goods to a degree less than
secured as herein provided
extraordinary diligence shall be valid, provided it be:
1) In writing, signed by the shipper or owner;
b.
2) Supported by a valuable consideration other
than the service rendered by the common
Enforceability
1878
Arts.
1403,
97
Article
1403. The
following
contracts
unenforceable unless they are ratified:
are
(c)
(d)
98
real
rights
over
Lao Sok v. Sabaysabay, (1985)
Petitioner
Responden
14) To ratify or recognize obligations contracted
ts
before the agency;
15) Any other act of strict dominion. (n)
summary
c.
Greater
Efficiency
Convenience Art. 1358
or
Lao Sok
Lydia Sabaysabay,
Amparo Mangulat, Rosita
Salviejo, Nenita Ruinata,
Vilma Capillo and Virginia
Sanorjo
Petitioner owned and
operated a department
store while the private
respondents were all
salesladies of the
department store. The
department store was
razed by fire but
petitioner did not report
the loss of the job of the
salesladies as required by
the Labor Code.
99
Contracts in whatever
form they may have been
entered into are binding
on the parties unless form
is essential for the validity
and enforceability of that
particular contract.
The requirement of
writing for the offer made
by Lao Sok is only for
convenience and not
enforceability. In fact, the
petitioner could be
compelled to put the offer
in writing, a step no
longer necessary now
because of this petition.
100
Issue
WON Lao Sok is obligated to pay the
private respondents' separation pay. - YES
ratio
101
102
Responden
ts
Summary
103
Ratio
The crux of the matter centers on
whether or not the unnotarized deed of
sale purportedly executed on August 10,
1937 by the owner Pedro Villanueva, in
favor of petitioners, can be considered as a
valid instrument for effecting the alienation
by way of sale of a parcel of land registered
under the Torrens System.
104
105
Cirilo Paredes
App
elle
e
Jose Espino
sum
mar
y
106
issue
WON the enforcement of the contract
pleaded in the complaint is barred by the
Statute of Frauds NO
ratio
The Statute of Frauds, embodied in
Article 1403 of the Civil Code of the
Philippines, does not require that the
contract itself be in writing. The plain text
of Article 1403, paragraph (2) is clear that
a written note or memorandum,
embodying the essentials of the contract
and signed by the party charged, or his
agent, suffices to make the verbal
agreement enforceable, taking it out of the
operation of the statute.
107
108
109
Lim v. CA 99 (1980)
Article 1376. The usage or custom of the place
shall be borne in mind in the interpretation of the
peti Lim Yhi Luya
ambiguities of a contract, and shall fill the omission
tion
of stipulations which are ordinarily established.
ers
(1287)
res
pon
den
Article 1377. The interpretation of obscure words
ts
or stipulations in a contract shall not favor the party
sum
who caused the obscurity. (1288)
mar
y
Petitioner
Lim
Yhi
Luya
is
a
transmission of rights and interests shall prevail. If businessman, resident of Lingayen,
the contract is onerous, the doubt shall be settled in Pangasinan where he operates a
grocery store, hardware store and
favor of the greatest reciprocity of interests.
gasoline station. Private respondent
Hind Sugar Company is engaged in the
manufacturing and marketing of sugar,
its principal office located in Manaoag,
If the doubts are cast upon the principal object of Pangasinan.
110
issue
Whether the statement in the contract can
be construed as proof that the petitioner
has paid NO
Ratio
111
HELD:
The Supreme Court ruled that the taking
should not be reckoned as of 1947, and
that just compensation should not be
determined on the basis of the value of the
property that year.
2.
Appel
lant
3.
Appel
lees
4.
5.
FACTS:
In 1947, the republic, through the Armed
Forces of the Philippines (AFP), entered into
a lease agreement over a land in
Pampanga with Castellvi on a year-to-year
112
113
petitio
ners
respon
dents
Margarine-Verkaufs-Union
summa
ry
FACTS:
Respondent,
a
West
German
corporation not engaged in business in
the Philippines, was the consignee of
500 long tons of Philippine copra in
bulk with a total value of US$
108,750.00 shipped from Cebu City on
board
petitioner's
(a
Philippine
corporation) vessel, the SS "EASTERN
PLANET" for discharge at Hamburg,
Germany.
Petitioners bill of lading for the cargo
provides: Except as otherwise stated
herein and in - the Charter Party, this
contract shall be governed by the laws
of the Flag of the Ship carrying the
goods. In case of average, same shall
be adjusted according to York-Antwerp
Rules of 1950.
A fire broke out aboard the ship and
caused water damage to the copra
shipment in the amount of US$591.38.
Respondent filed a claim for payment
from the petitioner but the latter
rejected the claim. Respondent then
filed a case for recovery of the amount
with the CFI Manila
o CFI: Ruled in favor of the
respondent. Ordered the
petitioner to pay
Petitioners argument: Article 848 of
the Code of Commerce which would
bar claims for averages not exceeding
5% of the claimant's interest should be
applied rather than the lower court's
ruling that petitioner's bill of lading
expressly contained "an agreement to
the contrary," i.e. for the application of
the York-Antwerp Rules which provide
for respondent's fun recovery of the
damage loss.
ISSUE:
WON petitioner should pay for the damage
[YES]
HELD:
114
Yes.
1.
2.
-
115
116
117
(1302a)
iii.
118
a.
b.
c.
d.
e.
f.
119
120
121
deficiency.
122
superior and inferior courts, and other officers and Soledad. Benigno abandoned his wife
Cabaliw, thus the latter filed an action in
employees connected with the administration of
justice, the property and rights in litigation or leviedcourt for support. The Court ordered
upon an execution before the court within whose Benigno to pay her P75 a month. However,
jurisdiction or territory they exercise their respectiveBenigno did not pay and instead sold their
property to his son-in-law Soterro. The
functions; this prohibition includes the act of
acquiring by assignment and shall apply to lawyers,transaction was done without Isidoras
with respect to the property and rights which may consent. Prior to the sale, Soterro already
knew that there was a judgment rendered
be the object of any litigation in which they may
against his father-in-law but proceeded to
take part by virtue of their profession.
buy the property anyway. When Cabaliw
found out, she instituted an action along
with her daughter to recover the
(6) Any others specially disqualified by law. (1459a) properties.
123
HSBC
appelle
e
summa
ry
Ratio
When the transaction involves a
parcel of land, the 4 year period fixed in
124
issue
WON the sale of the lots by Gemina
without the consent of the husband is
defective. YES
ratio
Voidable Contracts
res
pon
den
ts
125
126
Gutierrez Hermanos
defend
antappella
nt
Engracio Orense
summa
ry
127
issue
Whether defendant Orense had ratified the
sale by Duran, which would entitle plaintiff
Gutierrez Hermanos to delivery, rentals,
and damages.YES. He had consented
to the sale of the property; hence, it is
valid.
ratio
In this case, though Duran indeed was
not the owner of the property, Orense had
conferred a verbal, or at least implied,
power of agency upon him, and he had
accepted it impliedly by selling the
property. The principal must therefore
fulfill all the obligations contracted by
the agent actin within the scope of his
authority.
128