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Sanchez v. Rigos No. L-25494, June 14, 1972 C.J. Concepcion Nicolas Sanchez, plaintiff-appellee vs.

Severina Rigos, defendant-appelland. Facts: Nicolas Sanchez and Severina Rigos executed an instrument entitled Option to Purchase wherein Mrs. Rigos agreed, promised and committed to sell to Mr. Sanchez a parcel of land for the amount of P1,510 within two years from the date of the instrument, with the understanding that the said option shall be deemed terminated and elapsed if Mr. Sanchez shall fail to exercise his right to buy the property within the stipulated period. Mrs. Rigos agreed and committed to sell and Mr. Sanchez agreed and committed to buy. But there is nothing in the contract to indicate that her agreement, promise and undertaking is supported by a consideration distinct from the price stipulated for the sale of the land. Mr. Sanchez has made several tenders of payment in the said amount within the period before any withdrawal from the contract has been made by Mrs. Rigos, but were rejected nevertheless. Issue: Can an accepted unilateral promise to sell without consideration distinct from the price be withdrawn arbitrarily? Held: No. An accepted promise to sell is an offer to sell when accepted becomes a contract of sale. Rationale: Since there may be no valid contract without a cause or consideration, the promisor is not bound by his promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract of sale. This view has the advantage of avoiding a conflict between Articles 1324 on the general principles on contracts and 1479 on sales of the Civil Code.

Article 1324. When the offeror has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal, except when the option is founded upon consideration, as something paid or promised. Article 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissory if the promise is supported by a consideration distinct from the price. The Court is of the considered opinion that it should, as it hereby reiterates the doctrine laid down in the Atkins, Kroll and Co. case, and that, insofar as inconsistent therewith, the view adhered to in the Southwestern Sugar & Molasses Co. case should be deemed abandoned or modified

Velasco vs. CAFACTS: The Velasco family leased a property from Magdalena Estates, and sometime in1962 offered to purchase the lot which Lorenzo Velasco, thru Socorro Velasco, madea P10K deposit. When plaintiff tendered an amount of P20K to Magdalena, it was notaccepted. Defendant avers that it refused to accept the tendered payment as itconsidered the offer to sell rescinded for failure of petitioner to complete the downpayment before Dec 1962. The plaintiff avers that there was a perfected contract tosell by virtue of the deposit if P10K as down payment.Petitioners initially filed a motion for specific performance to compel defendants toexecute the sale which was dismissed and for moral and exemplary damages. Uponappeal, petitioners were required by CA to file their printed record on appeal within60 days from receipt. Subsequently, petitioners sent CA and Magdalena Estates amotion for Extension of Time on ground of failures in the printing machines.Respondents then filed a motion to dismiss the appeal of the petitioners which wasgranted by the CA on grounds that the motion for extension which was supposedlyfiled by petitioners on Jan 15, 1969 was filed at a later date beyond the requiredtime; and that the carrier of Makati Post office was merely induced to postmark theletters addressed to CA and counsel for respondent Jan 15, 1969.

ISSUES: a. whether the CA gravely abused its discretion in rendering its decisiondismissing the appeal of the petitioners? No. the CA found that thepetitioners failed to file the printed record on appeal on time; thusit was proper to dismiss the motion for the extension. b. Whether the agreement of Velasco and Magdalena Estates was a perfecteddeed of sale? No. The contracting parties failed to meet and agreeas to the manner of payment of down payment and installments.An agreement on the manner of payment is an essential element ina contract of sale.DECISION: The CA did not act arbitrarily on grounds that the fact that registry receipts aredated Jan 15 does not establish an unrebuttable presumption of the real date of mailing as evidenced by the testimonies of Malindog, a postmaster of the MakatiPost Office. As petitioners failed to comply with its duty of filing the printed recordon appeal within 60 days of receipt thereof, their motion for the extension of periodto file printed record is deemed inexistent. There was no perfected contract of sale because the minds of the parties did notmeet as regards to the manner of payment. Petitioners also admit that they andrespondents still had to meet how and when the down payment and installmentpayments were to be paid. A definite agreement on the manner of payment of thepurchase price is an essential element in the formation of a binding contract of sale.the fact that a deposit of P10K is made does not prove the perfection of anypurchase and sale agreement. DISSENT (Teehankee) The late submission of the printed record on appeal does not call for the dismissal of the appeal. The fact that the petitioners have made a deposit of

P10K deserves aconsideration of the appeal. The 60-day period is imposed as a procedural rule,indispensable to prevent needless delays and speedy discharge of judicial business.But this should be distinguished from the mandatory 30-day period to perfect appealwhere failure calls for the dismissal of the unperfected appeal. Such a harsh penaltyappears to be in derogation of the purpose of the Rules of Court which is the properand just determination of a litigation.
Interest; unconscionable rate. Aside from the payment of the principal obligation of P1,936,800.00, the parties agreed that respondent pay interest at the rate of 25% from February 17, 1997 until fully paid. Such rate, however, is excessive and thus, void. Since the stipulation on the interest rate is void, it is as if there was no express contract thereon. To be sure, courts may reduce the interest rate as reason and equity demand. In this case, 12% interest is reasonable. Pentacapital Investment Corporation vs. Makilito Mahinay/Pentacapital Investment Corporation Vs. Mikilito Mahinay, G.R. No. 171736, July 5, 2010 Loan; promissory note: elements. To ascertain whether or not respondent is bound by the promissory notes, it must be established that all the elements of a contract of loan are present. Like any other contract, a contract of loan is subject to the rules governing the requisites and validity of contracts in general. It is elementary in this jurisdiction that what determines the validity of a contract, in general, is the presence of the following elements: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established. Under Article 1354 of the Civil Code, it is presumed that consideration exists and is lawful unless the debtor proves the contrary. Moreover, under Section 3, Rule 131 of the Rules of Court, the following are disputable presumptions: (1) private transactions have been fair and regular; (2) the ordinary course of business has been followed; and (3) there was sufficient consideration for a contract. Pentacapital Investment Corporation vs. Makilito Mahinay/Pentacapital Investment Corporation Vs. Mikilito Mahinay, G.R. No. 171736, July 5, 2010

Ong Yui vs. CA Case Digest

Ong Yui vs. Court of Appeals (91 SCRA 223) Facts: On august 26, 1967, Ong Yiu was a fare paying passenger of respondent PAL from Mactan, Cebu to Butuan City wherein he was scheduled to attend a trial. As a passenger, he checked in one piece of luggae, blue maleta for which he was issued a claim ticket. Upon arrival at Butuan City, petitioner claimed his luggage but it could not be found. PAL Butuan sent a message to PAL Cebu which in turn sent a message to PAL Manila that same afternoon. PAL Manila advised PAL Cebu that the luggage has been overcarried to Manila and that it would be forwarded to PAL Cebu that same day. PAL Cebu then advised PAL Butuan that the luggage will be forwarded the following day,

on scheduled morning flight. This message was not received by PAL Butuan as all the personnel had already gone for the day. Meanwhile, Ong Yiu was worried about the missing luggage because it contained vital documents needed for the trial the next day so he wired PAL Cebu demanding delivery of his luggage before noon that next day or he would hold PAL liable for damages based on gross negligence. Early morning, petitioner went to the Butuan Airport to inquire about the luggage but did not wait for the arrival of the morning flight at 10:00am. which carried his luggage. A certain Dagorro, a driver of a colorum car, who also used to drive the petitioner volunteered to take the luggage to the petitioner. He revelaed that the documents were lost. Ong Yiu demanded from PAL Cebu actual and compensatory damages as an incident of breach of contract of carriage. Issue: 1. 2. Whether or not PAL is guilty of only simple negligence and not gross negligence? Whether the doctrine of limited liability doctrine applies in the instant case?

Held: PAL had not acted in bad faith. It exercised due diligence in looking for petitioners luggage which had been miscarried. Had petitioner waited or caused someone to wait at the airport for the arrival of the morning flight which carried his luggage, he would have been able to retrieve his luggage sooner. In the absence of a wrongful act or omission or fraud, the petitioner is not entitled to moral damages. Neither is he entitled to exemplary damages absent any proof that the defendant acted in a wanton, fraudulent, reckless manner. The limited liability applies in this case. On the presumed negligence of PAL, its liability for the loss however, is limited on the stipulation written on the back of the plane Ticket which is P100 per baggage. The petitioner not having declared a greater value and not having called the attention of PAL on its true value and paid the tariff therefore. The stipulation is printed in reasonably and fairly big letters and is easily readable. Moreso, petitioner had been a frequent passenger of PAL from Cebu to Butuan City and back and he being a lawyer and a businessman, must be fully aware of these conditions.

Weldon vs. CAFACTS: Petitioner drafted plans for a theater building which private respondent Canciointended to put up. He submitted a proposal for the supervision of the constructionon commission basis which private respondent never signed. Included is a setting upa revolving fund of P10K for the costs replenished by Cancio and the payment topetitioner of a 10% of total costs as commission. Upon payment of the P10K,petitioner sent another proposal stipulating a price of P600K for the constructionentitled Building Contract. Subsequent payments were made by Cancio as per

Tang v. CA- Insurance Fraud or Mistake 90 SCRA 236

> 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 nephew Vicente Tang as beneficiary.

> On Nov. 15, 1965, Lee again applied for additional insurance of her life for 40T. Since it was only recent from the time she first applied, no further medical exam was made but she accomplished Part 1 (which certified the truthfulness of statements made in Part. 2) > The policy was again approved. On Apri 20 1966, Lee Su Guat died of Lung cancer. > Tang claimed the amount o 100T but Philamlife refused to pay on the ground that the insured was guilty of concealment and misrepresentation. > Both trial court and CA ruled that Lee was guilty of concealment. > Tangs position, however, is that because Lee was illiterate and spoke only Chinese, she could not be held guilty of concealment of her health history because the application for insurance was English, and the insurer has not proven that the terms thereof had been fully explained to her as provided by Art. 1332 of CC.


Whether or not Art. 1332 applies.

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 avoid its performance.

It is petitioner who is seeking to enforce it, even as fraud or mistake is NOT alleged. Accordingly, Philamlife was under no obligation to prove that the terms of the insurance contract were fully explained to the other party. Even if we were to say that the insurer is the one seeking the performance of the cont contracts by avoiding paying the claim, it has to be noted as above stated that there has been NO imputation of mistake of fraud by the illiterate insured whose personality is represented by her beneficiary. In sum, Art. 1332 is inapplicable, and considering the findings of both the trial court and the CA as to the Concealment of Lee, the SC affirms their decisions.

Concurring: J., Antonio

In a contract of insurance, each party must communicate to the other, in good faith, all facts within his knowledge which are material to the contract, and which the other has no means of ascertaining. As a general rule, the failure by the insured to disclose conditions affecting the risk of which he is aware makes the contract voidable at the option of the insurer.

The reason for this rule is that insurance policies are traditionally contracts uberrimae fidei, which means most abundant good faith, absolute and perfect candor or openness and honesty, absence of any concealment or deception however slight. Here the CA found that the insured deliberately concealed material facts about her physical condition and history and/or concealed with whoever assisted her in relaying false information to the medical examiner. Certainly, the petitioner cannot assume inconsistent positions by attempting to enforce the contract of insurance for the purpose of collecting the proceeds of the policy and at the same time nullify the contract by claiming that it was executed through fraud or mistake.

NOTE: Art. 1332: When one of the parties is unable to read or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to him