ACCEPTANCE

Capalla v COMELEC, G.R. No. 201112, June 2012 (concurring of J. Sereno)

Smartmatic, after a public bidding, was awarded the contract where COMELEC would
lease the goods with an option to purchase the goods which can be exercised until
December 2010. The period to exercise the option to purchase was unilaterally extended
by Smartmatic until March 2012, in which COMELEC purchased several PCOS machines.
Capalla et. al. were claiming that the transactions were illegal because the option to
purchase of COMELEC had already lapsed and assert that COMELEC’s acceptance of
Smartmatic’s unilateral extension of the option period constitutes substantial amendment
to the contract giving undue benefit to the winning bidder not available to the other bidders.
Q: Was the unilateral extension made by Smartmatic valid? Yes. There was already a
public bidding as to the right to lease to the government election machineries, with option
to purchase. The amendment here was only for the extension of the option to purchase
which was already bidded upon. An option is only a preparatory contract and a continuing
offer to enter into a principal contract. COMELEC is given the right to decide whether or
not it wants to purchase the subject goods – which makes the principal contract uncertain.
A longer option period would mean that more time would be given to the optionee to
consider circumstances affecting its decision whether to purchase the goods or not. Thus,
this is more beneficial to COMELEC.
Separate opinion, CJ. Sereno: In relation to the autonomy of will of the parties, an option
to purchase exercisable within a fixed period, embedded in a lease contract, expires after
that fixed period, because the lapse thereof is a resolutory condition that extinguishes the
option to purchase. Both parties can agree to waive the resolutory condition, however, in
the form of an extension of the period for performance, under the very clear provisions of
the Civil Code. Here, because COMELEC and Smartmatic agreed on the extension of the
period, the original period (December 2010) is waived, and the new period (March 2012)
has the force of law between the parties.
Malbarosa v CA, 402 SCRA 108 (2003)
Malbarosa sent a resignation letter with request for the incentive compensation. Valero
accepted the resignation and sent a letter-offer of P250K compensation to be satisfied
through a car. Malbarosa refused to sign the letter-offer because he was unsatisfied with
the said amount. Not having received the letter-offer with Malbarosa’s signature after two
weeks, Valero decided to withdraw its offer and asked Malbarosa to return the said car.
Malbarosa refused and argued that there was already implied acceptance when he retained
the possession of the said car.
Q1: Was there a valid acceptance? No. To produce a contract, there must be
acceptance of the offer which may be express or implied but must not qualify the
terms of the offer. The acceptance must be absolute, unconditional and without variance
of any sort from the offer. In the case, the respondent required the petitioner to accept the
offer by affixing his signature on the space provided in said letter-offer and writing the date
of said acceptance, thus foreclosing an implied acceptance or any other mode of acceptance
by the petitioner.
Q2: Was there an effective withdrawal of offer? Yes. An offer that is not accepted does
not give rise to a consent. The offeror may withdraw its offer and revoke the same
before acceptance thereof by the offeree.

Traders Royal Bank v Cuison, June 5, 2009

TRB foreclosed the mortgage property of CLCI upon its failure to pay. CLCI manifested
its interest to repurchase the property and gave TRB earnest money. TRB sent a repurchase
agreement (Letter 1). CLCI did not sign such because there was a mistake in the
computation of the price. Nevertheless, it tendered a check which TRB considered as part
of the earnest money. CLCI claims that such payments should be applied to the purchase
price on the ground that the repurchase agreement was already perfected.

Q: Was the repurchase agreement perfected? Yes. TRB’s Letter 1 was effectively a
counter-offer that CLCI must be shown to have accepted absolutely and unqualifiedly in
order to give birth to a perfected contract. Under the law, a contract is perfected by mere
consent, that is, from the moment that there is a meeting of the offer and the acceptance
upon the thing and the cause that constitute the contract. The law requires that the offer
must be certain and the acceptance absolute and unqualified. An acceptance of an offer
may be express and implied; a qualified offer constitutes a counter-offer. It can be
concluded that there was agreement on both parties to repurchase which perfected the
contract.

Talampas vs. Moldex Realty, G.R. No. 170134, June 17, 2015
Moldex Realty asked Talampas Construction to suspend its construction work due to a change in the
subdivision plan. Due to such termination, Moldex paid Talampas its billings. However, Talampas
made additional demands for the equipment rentals and cost of opportunity loss. Moldex contends
that it is not liable because the contract was already terminated upon the acceptance of the
payment of Talampas.

Q: Was the unilateral termination valid? No. Consent is manifested by the meeting of the offer and
the acceptance upon the thing and the cause which are to constitute the contract. The offer must
be certain, and the acceptance, whether express or implied, must be absolute. Despite receipt of
payments, no absolute acceptance of the respondent’s offer took place because the petitioner still
demanded the payment of equipment rentals, cost of opportunity lost, among others. In fact, the
payments received were for finished or delivered works and for expenses incurred for the
respondent’s account. By making the additional demands, the petitioner effectively made a
qualified acceptance or a counteroffer, which the respondent did not accept. Under these
circumstances, we see no full consent.

OBJECT
Blas v Santos, 1 SCRA 899 (1961)
Maxima prepared a document stating “I promise in this document that all the properties
my husband and I will leave, the portion and share corresponding to me when I make my
will, I will give one-half (½) to the heirs and legatees or the beneficiaries named in the will
of my husband”. The lower court ruled that such document is void for including future
inheritance which is a prohibited object of a contract.

Q: Is the document valid? Yes. Future inheritance is any property or right not in existence
or capable of determination at the time of the contract, that a person may in the future
acquire by succession. The properties subject of the document executed by Maxima are
well defined properties, existing at the time of the agreement, as her share in the conjugal
partnership. Certainly, Maxima’s actual share in the conjugal properties may not be
considered as future inheritance because they were actually in existence at the time the
document was executed.

Tanedo v CA, 252 SCRA 80 (1996)

In 1962, Lazaro executed a deed of sale in favor of Ricardo involving a property which
was his “future inheritance” from his parents. After his father died in 1980, Lazaro executed
an affidavit of conformity acknowledging the 1962 sale. In 1981, another deed of sale was
executed over the said property.

Q1: Is the 1962 sale valid? – No. Art. 1347 provides that “no contract may be entered into
upon a future inheritance except in cases expressly authorized by law." The “affidavit of
conformity” in 1980, which sought to ratify the 1962 sale, was also useless because it
suffers from the same infirmity.
Q2: Is the 1981 sale valid? – Yes because the sale was effected after the death of his father
and the extrajudicial settlement of his father’s estate, Lazaro already became the owner of
his share of the land. Hence, at that point, he could already dispose of his share in the
property.

CAUSE
Liguez v CA, 102 Phil 577 (1957)
Carantes v CA, 76 SCRA 524 (1977)
Sps. Buenaventura v CA, 416 SCRA 263 (2003)

STAGES OF CONTRACT
Bugatti v CA, et al, G.R. No. 138113, October

ACCORDING TO PURPOSE
RENDITION OF SERVICE
WT Construction, Inc. v. The Province of Cebu, G.R. No. 208984, September 16, 2015
WTCI agreed to perform additional works to Province of Cebu even there was a lack of public
bidding. When it demanded payment from the Province of Cebu, the latter refused to pay. The RTC
ruled in favor of WTCI and ordered Cebu to pay damages. WTCI argued that obligation of the
Province is one for forbearance of money since its performance of the additional works was a mere
financial accommodation to the Province, hence it should be subject to 12% interest.
Q1: What is the nature of the liability of the Province of Cebu? – It was a contract of service. The
liability of the Province to WTCI is not in the nature of a forbearance of money as it does not involve
an acquiescence to the temporary use of WTCI's money, goods or credits. Liabilities arising from
construction contracts do not partake of loans or forbearance of money but are in the nature of
contracts of service.
ACCORDING TO NAME
INNOMINATE
Tinsay v. Yusay, 47 Phil. 639 (1925)
This case merely involves a document, entered into by the parties, which is very
imperfectly drawn and is in some respects somewhat ambiguous in its terms but it is,
nevertheless, quite clear that in its final clause Jovita and Petra expressly relinquish in favor
of the children of Jovito Yusay any and all rights which they, Jovita and Petra, might have
in the land assigned to Perpetua and her children in the partition.

Dizon v Gaborro, 83 SCRA 688 (1978)

FORM OF CONTRACTS
Hernaez v de Los Angeles, 27 SCRA 1276 (1969)
Hernaez wanted to recover the unpaid sum of 14K from the oral service contract with Hollywood Far
East Productions. The lower court ruled that since the amount involved exceeds 500PHP, it should
have been in writing for it to be enforceable.

Q1: Can the claim be enforceable despite not being in a written document? Yes. Article 1358
nowhere provides that the absence of written form in this case will make the agreement invalid or
unenforceable. On the contrary, Article 1357 clearly indicates that contracts covered by Article 1358
are binding and enforceable by action or suit despite the absence of writing. The law allows the
parties to compel each other to observe the form prescribe in Art. 1358 and such right can be
exercised simultaneously upon filing an action.

Zamora v Miranda, G.R. No. 162930, December 5, 2012

Zamora alleged Miranda sold to her the subject property. An acknowledgment of the receipt of the
amount of P50,000.00 was prepared, and Miranda allegedly signed the same. Miranda then sold the
property to Ang. Petitioner filed a complaint before the RTC seeking the annulment of the deed of
sale between Respondent and Ang. Petitioner also prayed that Respondent be ordered to execute
the corresponding deed of sale in her favor.
Q1: Can the acknowledgment receipt be a basis of Zamora’s claim over the subject property? – No.
Article 1358 of the Civil Code, which requires the embodiment of certain contracts in a public
instrument, is only for convenience, and registration of the instrument only adversely affects third
parties. Formal requirements are, therefore, for the benefit of third parties. Non-compliance therewith
does not adversely affect the validity of the contract nor the contractual rights and obligations of
the parties thereunder. However, the receipt cannot prove ownership over the subject property as
Miranda's signature on the receipt, as vendor, has been found to be forged by the NBI handwriting
expert.
SMPI vs. BF Homes, G.R. No. 169343, August 5, 2015
BF Homes sold to SMPI 130 lots. BF only delivered 110 TCTs to SMPI, hence, it filed a complaint for
specific performance. BF alleged that the Deed of Absolute Sale was entered into by a
representative without authority and since the deed was undated and not notarized, it cannot be
enforced.

Q1: Can the Deed of Absolute Sale of the lots be enforced? – Yes. The requirement of a public
document in Article 1358 is not for the validity of the instrument but for its efficacy. Although a
conveyance of land is not made in a public document, it does not affect the validity of such
conveyance. The Statute of Frauds is applicable only to contracts which are executory and not to
those which have been consummated either totally or partially.
Kabisig Real Wealth v Young Builders, G.R. No. 212375, Jan. 25, 2017
Kabisig contracted the services of Young Builders for the renovation of its buildings. Kabisig failed to
pay and contended that no written contract was ever entered into between the parties and it was
never informed of the estimated cost of the renovation. Hence, Young Builders filed an action for
collection of sum of money.
Q1: Is Young entitled to payment despite the lack of written contract? – Yes. It is settled that once
perfected, a contract is generally binding in whatever form, whether written or oral, it may have
been entered into, provided the essential requisites for its validity are present. Notwithstanding the
absence of sufficient proof, Young Builders still deserves to be recompensed for completing the work.
To determine the compensation due and to avoid unjust enrichment from resulting out of a fulfilled
contract, the principle of quantum meruit may be used. Under this principle, a contractor is allowed
to recover the reasonable value of the services rendered despite the lack of a written contract. The
measure of recovery under the principle should relate to the reasonable value of the services
performed. Being predicated on equity, said principle should only be applied if no express contract
was entered into, and no specific statutory provision was applicable.

REFORMATION OF INSTRUMENT
Garcia v Bisaya, 97 Phil 609 (1955)
A complaint for reformation of instrument must allege the true intent of the parties.
Otherwise, the complaint will be subject to dismissal for failure to state cause of
action. – Garcia and Bisaya entered into a deed of sale. When Garcia discovered that the
subject-land was registered and not unregistered as stated in the contract, he sought for
reformation. Bisaya alleged that Garcia’s action has prescribed. SC dismissed the
complaint not because of prescription but because of failure to state cause of action. The
complaint states no cause of action, for it fails to allege that the instrument to the reformed
does not express the real agreement or intention of the parties. Such allegation is essential
since the object sought in an action for reformation is to make an instrument conform to
the real agreement or intention of the parties. Courts do not reform instruments merely for
the sake of reforming them, but only to enable some party to asserts right under them as
reformed.
Bentir v Leande, 330 SCRA 591 (2000)
The prescriptive period for actions based upon a written contract and for reformation of an
instrument is 10 years under Art. 1144 of NCC. –
Sarming v Dy, 383 SCRA 131 (2002)
Believing that OCTwas the correct title corresponding to Lot 4163, Pinili prepared a notarized Settlement of Estate and
Sale. TCTs were issued in favor of Delfino who immediately took possession of the lot, which was actually one-half of Lot
4163 instead of Lot 5734 as designated in the deed.
1. Two years later, when Alejandra Delfino purchased the adjoining portion of the lot she had been occupying,
she discovered that what was designated in the deed, Lot 5734, was the wrong lot. She sought the assistance
of Pinili who approached Silveria and together they inquired from the Registry of Deeds about the status of Lot
4163. They found out that OCT No. 3129-A covering Lot 4163 was still on file. Alejandra Delfino paid the
necessary fees so that the title to Lot 4163 could be released to Silveria Flores, who promised to turn it over to
Pinili for the reformation of the deed of sale.
2. However, despite repeated demands, Silveria did not do so, prompting Alejandra and the vendors to file a
complaint against Silveria for reformation of the deed of sale with damages before the RTC.

Delfino purchased Lot 4163 from Pinili. TCTs were issued in her favor. Later, she wanted
to purchase the adjoining portion of the said lot. It was only then that she discovered that
what was designated in her deed was Lot 5743 and not Lot 4163. Upon inquiry to the RD,
Lot 4163 is still under the original certificate of title.
Q1: What is the remedy in case a deed, by reason of mistake, designates a wrong lot
number? – File a complaint for reformation of the deed of sale before the RTC. Reformation
is that remedy in equity by means of which a written instrument is made or construed so as to express or conform to the
real intention of the parties, as provided in Article 1359 . If mistake, fraud, inequitable conduct, or accident has prevented
a meeting of the minds of the parties, the proper remedy is not reformation of the instrument but annulment of the
contract.
An action for reformation of instrument under this provision of law may prosper only upon the concurrence of the
following requisites:
There must have been a meeting of the minds of the parties to the contact;
The instrument does not express the true intention of the parties; and
The failure of the instrument to express the true intention of the parties is due to mistake, fraud, inequitable conduct or
accident.
All of these requisites, in our view, are present in this case. There was a meeting of the minds between the parties to the
contract but the deed did not express the true intention of the parties due to mistake in the designation of the lot subject
of the deed. There is no dispute as to the intention of the parties to sell the land to Delfino but there was a mistake as to
the designation of the lot intended to be sold.

Makati Condominium v Multi-Realty, GR 185530, April 18, 2018

Multi-Realty filed a complaint for reformation of the Master Deed of Makati Tuscany alleging that its
ownership over the 98 parking slots was mistakenly not reflected in the Master Deed. Makati Tuscany
asserts that Multi-Realty admitted that they committed a mistake in drafting the Master Deed. Hence, it
should suffer the consequences of its mistake and should be bound by the plain meaning and import of
the instruments.

Q1: Is reformation proper in this case? –Yes. The question to be resolved is whether the provisions in the
Master Deed and Deed of Transfer over the 98 parking slots, as part of the common areas, expressed the
true intentions of the parties, and if not, whether it was due to mistake, fraud, inequitable conduct, or
accident. The burden of proof then rests upon the party asking for the reformation of the instrument to
overturn the presumption that a written instrument already sets out the true intentions of the
contracting parties. Multi-Realty was able to prove such. Therefore, reformation is proper.

INTERPRETATION
Wellex Group vs. U-Land Airlines, G.R. No. 167519, January 14, 2015
Wellex’s represented that APIC was a majority shareholder of APC. Because of that, U-land agreed to join
business with Wellex and executed a Memorandum of Agreement. Despite the absence of a share purchase
agreement, U-Land remitted to Wellex a total of 7M USD. Wellex acknowledged the remittances in a
confirmation letter and allegedly delivered stock certificates. Despite these transactions, Wellex and U-Land
still failed to enter into the share purchase agreement. Thus, U-Land filed a Complaint praying for rescission
of the MOA under Art. 1191 and damages against Wellex. CA ruled that it should be rescission under Art.
1384.
Q1: Did U-Land correctly sought the principal relief of rescission under Article 1191? – Yes. The failure of
one of the parties to comply with its reciprocal prestation allows the wronged party to seek the remedy of
Article 1191. It is a principal action precisely because it is a violation of the original reciprocal prestation.
Article 1381 and Article 1383, on the other hand, pertain to rescission where creditors or even third persons
not privy to the contract can file an action due to lesion or damage as a result of the contract. This case does
not involve prejudicial transactions affecting guardians, absentees, or fraud of creditors. Article 1381(3)
pertains in particular to a series of fraudulent actions on the part of the debtor who is in the process of
transferring or alienating property that can be used to satisfy the obligation of the debtor to the creditor. There
is no allegation of fraud for purposes of evading obligations to other creditors. The actions of the parties
involving the terms of the First Memorandum of Agreement do not fall under any of the enumerated contracts
that may be subject of rescission.