DKC HOLDINGS CORPORATION vs COURT OF APPEALS G.R. No. 118248.

April 5, 2000 case digest

Concept: Art. 1311

Facts
The subject of the controversy is a 14,021 square meter parcel of land located in Malinta, Valenzuela, Metro Manila which was
originally owned by private respondent Victor U. Bartolomes deceased mother, Encarnacion Bartolome, under Transfer Certificate of
Title No. B-37615 of the Register of Deeds of Metro Manila, District III. This lot was in front of one of the textile plants of petitioner
and, as such, was seen by the latter as a potential warehouse site.
March 16, 1988. DKC entered a contract of lease with option to buy with Encarnacion Bartolome (Victors deceased mom). DKC
was given the option to lease or lease with purchase the subject land, which option must be exercised within a period of two years
counted from the signing of the Contract. In turn, DKC undertook to pay P3,000.00 a month as consideration for the reservation of its
option. Within the two-year period, DKC shall serve formal written notice upon the lessor Encarnacion Bartolome of its desire to
exercise its option. The contract also provided that in case DKC chose to lease the property, it may take actual possession of the
premises. In such an event, the lease shall be for a period of six years, renewable for another six years, and the monthly rental fee shall
be P15,000.00 for the first six years and P18,000.00 for the next six years, in case of renewal.
DKC regularly paid Encarnacion until her death in January 1990. DKC then directed its payment to the son of Enacarnacion who
is the sole heir but Victor (Encarnacions son) refused the payment.
January 10, 1990. Victor executed an affidavit of Self Adjudication all over her deceased moms properties, including the subject
lot. Victor the dick then cancelled the deed of transfer of DKC and then issued a transfer certificate under his name, what a dick.
March 14, 1990. DKC sent a notice to Victor the royal douche, stating that they are going to exercise their option to lease,
tendering the amount of P15,000 as rent. Victor the douche, being a dick as he is, refused payment.
DKC then opened a saving account with the China Banking Corp. under the name of Victor and deposited the P15,000 as rental fee
while also adding another P6000 for reservation fees
DKC also tried to register and annotate the Contract on the title of Victor the dick to the property. Although respondent Register of
Deeds accepted the required fees, he nevertheless refused to register or annotate the same or even enter it in the day book or primary
register.
April 23, 1990. DKC filed a complaint for specific performance and damages against Victor and the Register of Deeds. DKC
prayed for the surrender and delivery of possession of the subject land in accordance with the Contract terms; the surrender of title for
registration and annotation thereon of the Contract; and the payment of P500,000.00 as actual damages, P500,000.00 as moral
damages, P500,000.00 as exemplary damages and P300,000.00 as attorneys fees.
During the May of 1990, some guy named Andres Lonzano filed a motion for intervention with motion to dismiss for he was a
tenant-tiller of the subject property, dude is under the Comprehensive Agrarian Reform Law, the motion was denied by the court, poor
guy.
The lower court then rendered its decision, it dismissed the complaint and ordered DKC to pay Victor for P30,000 as attorneys
fee. On appeal, the CA affirmed the decision of the lower court

Issue: W/ON the Contract of Lease with Option to Buy entered into by the late Encarnacion Bartolome with petitioner was terminated
upon her death or whether it binds her sole heir, Victor, even after her demise.

Held: No. Article 1311 of the Civil Code and jurisprudence, Victor is bound by the subject Contract of Lease with Option to buy
executed by his predecessor-in-interest. It is futile for Victor to insist that he is not a party to the contract because of the clear
provision of Article 1311 of the Civil Code. Indeed, being an heir of Encarnacion, there is privity of interest between him and his
deceased mother. He only succeeds to what rights his mother had and what is valid and binding against her is also valid and binding as
against him. The general rule, therefore, is that heirs are bound by contracts entered into by their predecessors-in-interest
except when the rights and obligations arising therefrom are not transmissible by (1) their nature, (2) stipulation or (3)
provision of law.

FLORENTINO VS.ENCARNACION, SR.GUERRERO, September 30,1977

NATURE
APPEAL from the decision of the Courtof First Instance of Ilocos Sur. Arciaga, J.
FACTS
-On May 22, 1964, the petitioners-appellants and the petitioners-appelleed filed with CFI an application for the registration under Act
496 of a parcel of agricultural land located at Cabugao, Ilocos Sur. The application alleged among other things that the applicants are
the common and pro-indiviso owners in fee simple of the said land with the improvements existing thereon; that to the best of the
knowledge and belief, there is no mortgage, hen or encumbrance of any kind whatsoever affecting said land, nor any other person
having any estate or interest thereon, legal or equitable, remainder, reservation at in expectancy; that said applicants had acquired the
aforesaid land thru and by inheritance from their predecessors in interest, their aunt, Doa Encarnacion Florentino, and Angel
Encarnacion acquired their respective shares of the land thru purchase from the original heirs, Jesus, Caridad, Lourdes and Dolores, all
surnamed Singson, on one hand and from Asuncion Florentino on the other.-After due notice and publication, the Court set the
application for hearing. Only the Director of Lands filed an opposition but was later withdrawn so an order of general default was
issued. Upon application of the applicants, the Clerk of Court was commissioned and authorized to receive the evidence of the
applicants and ordered to submit the same for the Court's proper resolution.-Exhibit O-1 embodied in the deed of extrajudicial
partition (Exhibit O),which states that with respect to the land situated in Barrio Lubong, Dacquel, Cabugao, Ilocos Sur, the fruits
thereof shall serve to defray the religious expenses, was the source of contention in this case (Spanish text).Florentino wanted to
include ExhibitO-1 on the title but the Encarnacions opposed and subsequently withdrawn their application on their shares, which was
opposed by the former.-The Court after hearing the motion for withdrawal and the opposition issued an order and for the purpose
of ascertaining and implifying that the products of the land made subject matter of this land registration case had been used in
answering for the payment of expenses for the religious functions specified in the Deed of Extrajudicial Partition which was no
registered in the office of the Register of Deeds from time immemorial; and that the applicants knew of this arrangement and the Deed
of Extrajudicial Partition of August 24,1947, was not signed by AngelEncarnacion or Salvador Encarnacion, Jr.-CFI: The self-imposed
arrangement in favor of the Church is a simple donation, but is void since the done has not accepted the donation and Salvador
Encarnacion, Jr. and Angel Encarnacion had not made any oral or written grant at all so the court allowed the religious expenses to be
made and entered on the undivided shares, interests and participations of all the applicants in this case, except that of Salvador
Encarnacion, Sr.,Salvador Encarnacion, Jr. and AngelEncarnacion."-the petitioners-appellants filed their Reply to the Opposition
reiterating their previous arguments, and also attacking the jurisdiction of the registration court to pass upon the validity or invalidity
of the agreement Exhibit O-1, alleging that such is litigable only in an ordinary action and not proper in a land registration
proceeding.-The Motion for Reconsideration and of New Trial was denied for lack of merit, but the court modified in highlighting that
the donee Church has not showed its clear acceptance of the donation, and is the real party of this case, not the petitioners-appellants
ISSUES
1. WON the lower own erred in concluding that the stipulation embodied in Exhibit O on religious expenses is just an arrangement
stipulation, or grant revocable at the unilateral option of the co-owners1.1 WON the lower court erred in finding and concluding that
the encumbrance or religious expenses embodied in Exhibit O, the extrajudicial partition between the co-heirs, is binding only on the
applicants Miguel Florentino,Rosario Encarnacion de Florentino, Manuel Arce, Jose Florentino, Antonio Florentino, Victorino
Florentino, Remedios Encarnacion and Severina Encarnacion2. WON the lower court erred inholding that rule that the petitioners-
appellants are not the real parties in interest, but the Church3. WON the lower court as a registration court erred in passing upon the
merits of the encumbrance(Exhibit O-1) as the same was never put to issue and as the question involved is an adjudication of rights
of the parties
HELD1. YES, the court erred inconcluding that the stipulation is just an arrangement stipulation.It cannot be revoked
unilaterally.
Ratio
The contract must bind bothparties, based on the principles (1)that obligation wising from contractshave the force of law between
thecontracting parties; and (2) that themmust be mutuality between theparties band on their essentialequality, to which is repugnant
tohave one party bound by the contractleaving the other free therefrom.
Reasoning
The stipulation (Exhibit O-1) is part of an extrajudicial partition(Exh. O) duly agreed and signed by the parties, hence the same must
bindthe contracting parties thereto and its validity or compliance cannot be left to the will of one of them- The said stipulation is a
stipulationpour autrui.
A
stipulation pourautrui
is a stipulation in favor of a third person conferring a clear and deliberate favor upon him, and which stipulation is merely a part of contract entered into by the parties,
neither of whom acted as agent of the third person, and such third personmay demand its fulfillment provided that he communicates his acceptance
to the obligor before it is revoked.-
Requisites
: (1) that the stipulation in favor of a third person should be apart, not the whole, of the contract,(2) that the favorable stipulation should not be
conditioned or compensated by any kind of obligation whatever; and (3) neither of the contracting parties bears the legal representation or authorization
of third party.-
Valid stipulation pour autrui
: it must be the purpose and intent of the stipulating parties to benefit the third person, and it is not sufficient that the third person may be
incidentally benefited by the stipulation. The intention of the parties may be disclosed by their contract. It matters not whether the
stipulation is in the nature of a gift or whether there is an obligation owing from the promise to the third person. That no such obligation exists may in
some degree assist in determining whether the parties intended to benefit a third person.-The evidence on record shows that the true intent of the
parties is to confer a direct and material benefit upon the Church.- While a stipulation in favor of a third person has no binding effect in itself before its acceptance
by the party favored, the law does not provide when the third person must make his acceptance. As a rule, there is no time limit; such third person has all the time
until the stipulation is revoked. Here, We find that the Church accepted (implicitly) the stipulation in its favor before it is sought to be
revoked by some of the co owners.
1.1 YES, the court should havefound the other co-owners to bebound by the extrajudicialpartition.
Ratio
Being subsequent purchasers,they are privies or successors ininterest; it is axiomatic that contracts

are enforceable against the partiesand their privies.

Reasoning
The co-owners are shown to have given their conformity to such agreement when they kept their peace in 1962 and 1963, having already
bought their respective shares of the subject land but did not question the enforcement of the agreement as against them. They are also shown to have knowledge
of Exhibit O-1 as they had admitted in a Deed of Real Mortgage executed by them.
2. YES
Ratio
That one of the parties to a contract pour autrui is entitled to bring an action for its enforcement or to prevent its breach is too clear to need any
extensive discussion. Upon the other hand, that the contract involved contained a stipulation pourautrui amplifies this settled rule only in the sense that the third
person for whose benefit the contract was entered into may also demand its fulfillment provided he had communicated his acceptance thereof to the obligor before
the stipulation in his favor is revoked.
Reasoning
The annotation of ExhibitO-1 on the face of the title to be issued in this case is merely a guarantee of the continued enforcement and fulfillment
of the beneficial stipulation.
3. NO
Ratio
The otherwise rigid rule that the jurisdiction of the Land Registration Court, being special and limited in character and proceedings thereon summary in nature, does
not extend to cases involving issues properly litigable in other independent suits or ordinary civil actions
Reasoning
 The peculiarity of the exceptions is based not alone on the fact that Land Registration Courts are likewise the same Courts of First Instance, but also
the following premises: (1) Mutual consent of the parties or their acquiescence in submitting the aforesaid issues for determination by the court in
the registration proceedings; (2) Full opportunity given to the parties in the presentation of their respective sides of the issues and of the evidence in
support thereto; (3) Consideration by the court that the evidence already of record is sufficient and adequate for rendering a decision upon these issues.-Also, the
case has been languishing in our courts for thirteen long years. To require that it be remanded to the lower own for another proceeding under its general
jurisdiction is not inconsonance with our avowed policy of speedy justice.
Dispositive
IN VIEW OF THEFOREGOING, the decision of the Court of First Instance of Ilocos Sur in Land Registration Case No. N-310 is affirmed but modified
to allow the annotation of Exhibit O-1 as an encumbrance on the face of the title to be finally issued in favor of all the applicants (herein appellants and herein
appellees) in the registration proceedings below. No pronouncement as to costs.SO ORDERED
So Ping Bun v. CA

Facts:

In 1963, Tek Hua Trading Co. entered into lease agreements with lessor Dee C. Chuan and Sons, Inc. involving four (4) premises in
Binondo, which the former used to store textiles. The agreements were for one (1) year, with provisions for month-to-month rental
should the lessee continue to occupy the properties after the term. In 1976, Tek Hua Trading Co. was dissolved, and the former
members formed Tek Hua Enterprises Corp., herein respondent. So Pek Giok, managing partner of the defunct company, died in 1986.
Petitioner So Ping Bun, his grandson, occupied the warehouse for his own textile business, Trendsetter Marketing. On March 1, 1991,
private respondent Tiong sent a letter to petitioner, demanding that the latter vacate the premises. Petitioner refused, and on March 4,
1992, he requested formal contracts of lease with DCCSI. The contracts were executed. Private respondents moved for the
nullification of the contract and claimed damages. The petition was granted by the trial court, and eventually by the Court of Appeals.

Issue:

(1) Whether So Ping Bun is guilty of tortuous interference of contract

(2) Whether private respondents are entitled to attorneys fees
Held:

(1) Damage is the loss, hurt, or harm which results from injury, and damages are the recompense or compensation awarded for the
damage suffered. One becomes liable in an action for damages for a nontrespassory invasion of another's interest in the private use and
enjoyment of asset if (a) the other has property rights and privileges with respect to the use or enjoyment interfered with, (b) the
invasion is substantial, (c) the defendant's conduct is a legal cause of the invasion, and (d) the invasion is either intentional and
unreasonable or unintentional and actionable under general negligence rules. The elements of tort interference are: (1) existence of a
valid contract; (2) knowledge on the part of the third person of the existence of contract; and (3) interference of the third person is
without legal justification or excuse. Petitioner's Trendsetter Marketing asked DCCSI to execute lease contracts in its favor, and as a
result petitioner deprived respondent corporation of the latter's property right. Clearly, and as correctly viewed by the appellate court,
the three elements of tort interference above-mentioned are present in the instant case.

Authorities debate on whether interference may be justified where the defendant acts for the sole purpose of furthering his own
financial or economic interest. One view is that, as a general rule, justification for interfering with the business relations of another
exists where the actor's motive is to benefit himself. Such justification does not exist where his sole motive is to cause harm to the
other. Added to this, some authorities believe that it is not necessary that the interferer's interest outweigh that of the party whose
rights are invaded, and that an individual acts under an economic interest that is substantial, not merely de minimis, such that wrongful
and malicious motives are negatived, for he acts in self-protection. Moreover justification for protecting one's financial position should
not be made to depend on a comparison of his economic interest in the subject matter with that of others. It is sufficient if the impetus
of his conduct lies in a proper business interest rather than in wrongful motives. Where there was no malice in the interference of a
contract, and the impulse behind one's conduct lies in a proper business interest rather than in wrongful motives, a party cannot be a
malicious interferer. Where the alleged interferer is financially interested, and such interest motivates his conduct, it cannot be said
that he is an officious or malicious intermeddler.

In the instant case, it is clear that petitioner So Ping Bun prevailed upon DCCSI to lease the warehouse to his enterprise at the expense
of respondent corporation. Though petitioner took interest in the property of respondent corporation and benefited from it, nothing on
record imputes deliberate wrongful motives or malice on him. Petitioner argues that damage is an essential element of tort
interference, and since the trial court and the appellate court ruled that private respondents were not entitled to actual, moral or
exemplary damages, it follows that he ought to be absolved of any liability, including attorney's fees.

While we do not encourage tort interferers seeking their economic interest to intrude into existing contracts at the expense of others,
however, we find that the conduct herein complained of did not transcend the limits forbidding an obligatory award for damages in the
absence of any malice. The business desire is there to make some gain to the detriment of the contracting parties. Lack of malice,
however, precludes damages. But it does not relieve petitioner of the legal liability for entering into contracts and causing breach of
existing ones. The respondent appellate court correctly confirmed the permanent injunction and nullification of the lease contracts
between DCCSI and Trendsetter Marketing, without awarding damages. The injunction saved the respondents from further damage or
injury caused by petitioner's interference.

(2) Lastly, the recovery of attorney's fees in the concept of actual or compensatory damages, is allowed under the circumstances
provided for in Article 2208 of the Civil Code. One such occasion is when the defendant's act or omission has compelled the plaintiff
to litigate with third persons or to incur expenses to protect his interest. But we have consistently held that the award of considerable
damages should have clear factual and legal bases. In connection with attorney's fees, the award should be commensurate to the
benefits that would have been derived from a favorable judgment. Settled is the rule that fairness of the award of damages by the trial
court calls for appellate review such that the award if far too excessive can be reduced. This ruling applies with equal force on the
award of attorney's fees. In a long line of cases we said, "It is not sound policy to place in penalty on the right to litigate. To compel
the defeated party to pay the fees of counsel for his successful opponent would throw wide open the door of temptation to the
opposing party and his counsel to swell the fees to undue proportions."

Considering that the respondent corporation's lease contract, at the time when the cause of action accrued, ran only on a month-to-
month basis whence before it was on a yearly basis, we find even the reduced amount of attorney's fees ordered by the Court of
Appeals still exorbitant in the light of prevailing jurisprudence. Consequently, the amount of two hundred thousand (P200,000.00)
awarded by respondent appellate court should be reduced to one hundred thousand (P100,000.00) pesos as the reasonable award or
attorney's fees in favor of private respondent corporation.

G.R. No. 119107 March 18, 2005

JOSE V. LAGON, petitioner,
vs.
HONORABLE COURT OF APPEALS and MENANDRO V. LAPUZ, respondents.
FACTS:
On June 23, 1982, petitioner Jose Lagon purchased two parcels of land located at Tacurong, Sultan Kudarat from the estate of Bai
Tonina Sepi. A few months after the sale, private respondent Menandro Lapuz filed a complaint for torts and damages against
petitioner before the Regional Trial Court (RTC) of Sultan Kudarat.
Private respondent claimed that he entered into a contract of lease with the late Bai Tonina Sepi over three parcels of land in Sultan
Kudarat, Maguindanao beginning 1964. It was agreed upon that private respondent will put up commercial buildings which would, in
turn, be leased to new tenants. The rentals to be paid by those tenants would answer for the rent private respondent was obligated to
pay Bai Tonina Sepi for the lease of the land. In 1974, the lease contract ended but was allegedly renewed.
When Bai Tonina Sepi died, private respondent started remitting his rent to the court-appointed administrator of her estate. But when
the administrator advised him to stop collecting rentals from the tenants of the buildings he constructed, he discovered that petitioner,
representing himself as the new owner of the property, had been collecting rentals from the tenants. He thus filed a complaint
against the latter, accusing petitioner of inducing the heirs of Bai Tonina Sepi to sell the property to him, thereby violating his
leasehold rights over it.
Petitioner denied the allegation, thus contending that the heirs were in dire need of money to pay off the obligations of the deceased.
He also denied interfering with private respondent's leasehold rights as there was no lease contract covering the property when he
purchased it; that his personal investigation and inquiry revealed no claims or encumbrances on the subject lots.
On July 29, 1986, the RTC decided in favor of the private respondent.
Petitioner appealed the judgment to the Court of Appeals. The appellate court affirmed the ruling of the trial court with modification.
ISSUE:
Whether or not the purchase by petitioner of the subject property, during the supposed existence of private respondent's lease contract
with the late Bai Tonina Sepi, constituted tortuous interference for which petitioner should be held liable for damages.
HELD:
The Supreme Court affirmed the petition and sets aside the decision of the appellate court.
Before the appellate court, petitioner disclaimed knowledge of any lease contract between the late Bai Tonina Sepi and private
respondent. On the other hand, private respondent insisted that it was impossible for petitioner not to know about the contract since the
latter was aware that he was collecting rentals from the tenants of the building.
While the appellate court disbelieved the contentions of both parties, it nevertheless held that, for petitioner to become liable for
damages, he must have known of the lease contract and must have also acted with malice or bad faith when he bought the subject
parcels of land.
Article 1314 of the Civil Code provides that any third person who induces another to violate his contract shall be liable for damages to
the other contracting party.
The Court, in the case of So Ping Bun v. Court of Appeals, laid down the elements of tortuous interference with contractual relations:
(a) existence of a valid contract;
(b) knowledge on the part of the third person of the existence
of the contract and (c) interference of the third person without legal justification or excuse.
Private respondent presented in court a notarized copy of the purported lease renewal to show the existence of a valid contract. While
the contract appeared as duly notarized, the notarization thereof, however, only proved its due
execution and delivery but not the veracity of its contents. Nonetheless, after undergoing the rigid scrutiny of petitioner's counsel and
after the trial court declared it to be valid and subsisting, the notarized copy of the lease contract presented in court appeared to be
incontestable proof that private respondent and the late Bai Tonina Sepi actually renewed their lease contract.
The second element, on the other hand, in this case, petitioner claims that he had no knowledge of the lease contract.
His sellers (the heirs of Bai Tonina Sepi) likewise allegedly did not inform him of any existing lease contract. Even the registry of
property had no record of the same.
To sustain a case for tortuous interference, the defendant must have acted with malice or must have been driven by purely impious
reasons to injure the plaintiff. In other words, his act of interference cannot be justified.
Furthermore, the records do not support the allegation of private respondent that petitioner induced the heirs of Bai Tonina Sepi to sell
the property to him. The records show that the decision of the heirs of the late Bai Tonina Sepi to sell the property was completely of
their own volition and that petitioner did absolutely nothing to influence their judgment. Private respondent himself did not proffer any
evidence to support his claim.
Petitioner's purchase of the subject property was merely an advancement of his financial or economic interests, absent any proof that
he was enthused by improper motives.
In sum, inasmuch as not all three elements to hold petitioner liable for tortuous interference are present, petitioner cannot be made to
answer for private respondent's losses. This case is one of damnun absque injuria or damage without injury.

EMETERIO CUI vs. ARELLANO UNIVERSITY May 30, 1961 G.R. No. L-15127 DIGEST
Emeterio Cui vs. Arellano University
G.R. No. 15172
May 30, 1961

FACTS: Before the school year 1948-1949 Emeterio Cui took up preparatory law course in the Arellano University. After Finishing
his preparatory law course plaintiff enrolled in the College of Law of the defendant from school year 1948-1949. Plaintiff finished his
law studies in the defendant university up to and including the first semester of the fourt year. During all the school years in which
plaintiff was studying law in defendant law college, Francisco R. Capistrano, brother of mother of plaintiff, was the dean of college of
law and legal counsel of the defendant university. Plaintiff enrolled for last semester of his law studies in the defendant university but
failed to pay tuition fees because his uncle Dean Francisco R. Capistrano, having severed his connection with defendant and having
accepted the deanship and chancellorship of the college of law of the Abad Santos University graduating from the college of law of the
latter university. Plaintiff, during all the time he has studying law in Defendant University was awarded scholarship grants, for
scholastic merit, so that his semestral tuition fees were retured to him after the end of semester and when his scholarship grants were
awarded to him. The whole amount of tuition fess paid by the plaintiff to defendant and refunded to him by the latter from the first
semester up to and including the first semester of his last year in college of law or the fourth year, is in total P1,003.87. After
Graduating in law from Abad Santos University he applied to take the bar examination. To secure permission to take the bar, he
needed the transcript of his records in defendant Arellano University. Plaintiff petitioned the latter to issue to him the needed
transcripts. The defendant refused until after he paid back the P1,003.87 which defendant refunded him. As he could not take the bar
examination without those transcripts, plaintiff paid to defendant the said sum under protest.

ISSUE: Whether the provision of the contract between plaintiff and defendant, whereby the former waived his right to transfer to
another school without refunding to the latter the equivalent of his scholarship in cash, is valid or not.

HELD: Memorandum No. 38 issued by the Director of Private Schools provides that When students are given full or partial
scholarship, it is understood that such scholarship are merited and earned. The amount in tuition and other fees corresponding to These
scholarship should not be subsequently charged to recipient students when they decide to quit school or to transfer to another
institution. Scholarship should not be offered merely to attract and keep students in a school.

Memorandum No. 38 merely incorporates a sound principle of public policy. The defendant uses the scholarship as a business scheme
designed to increase the business potential of an education institution. Thus conceived it is not only inconsistent with sound policy but
also good morals. The practice of awarding scholarship to attract students and keep them in school is not Good custom nor has it
received some kind of social and practical confirmation except in some private institution as in Arellano University.
Wherefore, the decision appealed from is hereby reversed and another one shall be entered sentencing the defendant to pay the
plaintiff the sum of P1,033.87, with interest thereon at the legal rate from September 1, 1954, date of the institution of this case, as
well as the costs, and dismissing the defendants counterclaim. It is so ordered.

PIA VS OPLE

MARCH 28, 2013 ~ VBDIAZ

PAKISTAN INTERNATIONAL AIRLINES (PIA) CORPORATION vs HON. BLAS F. OPLE, in his capacity as Minister of Labor;

HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister; ETHELYNNE B. FARRALES and MARIA MOONYEEN
MAMASIG

G.R. No. 61594 September 28, 1990

FACTS: On 2 December 1978, petitioner Pakistan International Airlines Corporation (PIA), a foreign corporation licensed to do

business in the Philippines, executed in Manila 2 separate contracts of employment, one with private respondent Farrales and the other

with private respondent Mamasig. 1 The contracts, which became effective on 9 January 1979, provided in pertinent portion as

follows:

5. DURATION OF EMPLOYMENT AND PENALTY

This agreement is for a period of 3 years, but can be extended by the mutual consent of the parties.

xxx xxx xxx

6. TERMINATION

xxx xxx xxx

Notwithstanding anything to contrary as herein provided, PIA reserves the right to terminate this agreement at any time by giving the

EMPLOYEE notice in writing in advance one month before the intended termination or in lieu thereof, by paying the EMPLOYEE

wages equivalent to one months salary.

xxx xxx xxx

10. APPLICABLE LAW:

This agreement shall be construed and governed under and by the laws of Pakistan, and only the Courts of Karachi, Pakistan shall

have the jurisdiction to consider any matter arising out of or under this agreement.

Farrales & Mamasig (employees) were hired as flight attendants after undergoing training. Base station was in Manila and flying

assignments to different parts of the Middle East and Europe.

roughly 1 year and 4 months prior to the expiration of the contracts of employment, PIA through Mr. Oscar Benares, counsel for and

official of the local branch of PIA, sent separate letters, informing them that they will be terminated effective September 1, 1980.

Farrales and Mamasig jointly instituted a complaint, for illegal dismissal and non-payment of company benefits and bonuses, against

PIA with the then Ministry of Labor and Employment (MOLE).

PIAs Contention: The PIA submitted its position paper, but no evidence, and there claimed that both private respondents were habitual

absentees; that both were in the habit of bringing in from abroad sizeable quantities of personal effects; and that PIA personnel at the

Manila International Airport had been discreetly warned by customs officials to advise private respondents to discontinue that practice.

PIA further claimed that the services of both private respondents were terminated pursuant to the provisions of the employment

contract.

Favorable decision for the respondents. The Order stated that private respondents had attained the status of regular employees after

they had rendered more than a year of continued service; that the stipulation limiting the period of the employment contract to 3 years

was null and void as violative of the provisions of the Labor Code and its implementing rules and regulations on regular and casual

employment; and that the dismissal, having been carried out without the requisite clearance from the MOLE, was illegal and entitled

private respondents to reinstatement with full backwages.

Decision sustained on appeal. Hence, this petition for certiorari

ISSUE: (Relative to the subject) Which law should govern over the case? Which court has jurisdiction?

HELD: Philippine Law and Philippine courts

Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which specifies, firstly, the law of Pakistan as the

applicable law of the agreement and, secondly, lays the venue for settlement of any dispute arising out of or in connection with the

agreement only [in] courts of Karachi Pakistan.

We have already pointed out that the relationship is much affected with public interest and that the otherwise applicable Philippine

laws and regulations cannot be rendered illusory by the parties agreeing upon some other law to govern their relationship.

the contract was not only executed in the Philippines, it was also performed here, at least partially; private respondents are Philippine

citizens and respondents, while petitioner, although a foreign corporation, is licensed to do business (and actually doing business) and

hence resident in the Philippines; lastly, private respondents were based in the Philippines in between their assigned flights to the

Middle East and Europe. All the above contacts point to the Philippine courts and administrative agencies as a proper forum for the

resolution of contractual disputes between the parties.

Under these circumstances, paragraph 10 of the employment agreement cannot be given effect so as to oust Philippine agencies and

courts of the jurisdiction vested upon them by Philippine law. Finally, and in any event, the petitioner PIA did not undertake to plead

and prove the contents of Pakistan law on the matter; it must therefore be presumed that the applicable provisions of the law of

Pakistan are the same as the applicable provisions of Philippine law.

[DOCTRINE OF PROCESSUAL PRESUMPTION, eh?]

Petition denied.

_______

NOTES:

Another Issue: petitioner PIA invokes paragraphs 5 and 6 of its contract of employment with private respondents Farrales and

Mamasig, arguing that its relationship with them was governed by the provisions of its contract rather than by the general provisions

of the Labor Code.

A contract freely entered into should, of course, be respected, as PIA argues, since a contract is the law between the parties. The

principle of party autonomy in contracts is not, however, an absolute principle. The rule in Article 1306, of our Civil Code is that the

contracting parties may establish such stipulations as they may deem convenient, provided they are not contrary to law, morals, good

customs, public order or public policy. Thus, counter-balancing the principle of autonomy of contracting parties is the equally general

rule that provisions of applicable law, especially provisions relating to matters affected with public policy, are deemed written into the

contract. Put a little differently, the governing principle is that parties may not contract away applicable provisions of law especially

peremptory provisions dealing with matters heavily impressed with public interest. The law relating to labor and employment is

clearly such an area and parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and

regulations by simply contracting with each other. It is thus necessary to appraise the contractual provisions invoked by petitioner PIA

in terms of their consistency with applicable Philippine law and regulations.

MALBAROSA V COURT OF APPEALS

CALLEJO; April 30, 2003

NATURE
Petition for review on certiorari of the decision of the CA.
FACTS

- The petitioner Salvador Malbarosa was the president and general manager of Philtectic Corporation and an officer of other
corporations belonging to the SEADC group of companies. SEADC assigned to him a 1982 model Mitsubishi Gallant Super Saloon
car and was also issued membership certificates in the Architectural Center, Inc.
- On January 8, 1990, Malabarosa tendered his resignation from all his positions in the SEADC group of companies and reiterating his
request for the payment of his incentive compensation for 1989 which is approximately P395,000.00 according to him.
- SEADC, through its President Louis Da Costa, accepted his resignation and entitled him to an incentive amounting to P251,057.67,
which was lower than Malbarosa's expectation. It is to be satisfied by transferring to him the car assigned to him, which estimated fair
market value is P220,000.00 and the membership share of SEADC subsidiary, Tradestar International Inc. in the Architectural Center,
Inc. amounting to P60,000.00.
- The respondent prepared the letter-offer dated march 14, 1990 and required Malbarosa to affix his conformity on the space provided
therefor and the date thereof on the right bottom position of the letter.
- On March 16, 1990, Da Costa met with the petitioner and handed to him the original copy of the letter-offer for his consideration but
he refused to sign it, instead said that he will review the offer first. More than two weeks have passed and Da Costa never heard
feedback from Malbarosa. Thus he decided to finally withdraw his offer on April 3, 1996. However, Malbarosa transmitted the copy of
the signed Letter-offer to respondent on April 7, 1996 and he alleged that he had already accepted the offer of the respondent when he
affixed his conformity thereto on the space provided therefor on March 28, 1990 and had sent to the respondent corporation on April
7, 1990 a copy of said March 14, 1990 Letter-offer bearing his conformity to the offer of the respondent; hence, the respondent can no
longer demand the return of the vehicle in question. He further avers that he had already impliedly accepted the offer when after said
respondents offer, he retained possession of the car.

Procedure

- Due to petitioner's refusal to return the vehicle after April 3, 1996, the respondent filed a complaint for recovery of personal property
with replevin, with damages and atty's fee.
- RTC issued a writ of replevin
- CA affirmed RTC's decision

ISSUES

1. WON there was a valid acceptance on Malbarosa's part of the March 14, 1990 letter-offer of respondent
2. WON there was an effective withdrawal by the respondent of said Letter-offer

HELD

1. NO.
- Article 1318 of CC says that There is no contract unless the following requisites
concur:
(1) consent of the contracting parties;
(2) object certain which is the subject matter of the contract
(3) cause of the obligation which is established
In this case, there is no contract as Malbarosa failed to meet the requirements of a
valid acceptance to wit:
(a) may be express or implied
(b) Must be absolute, unconditional and without variance of any sort from the offer
must be made known to the offeror
(d) Must be made in the manner prescribed by the offeror

Reasoning:

Malabarosa communicated his acceptance only after the knowledge of revocation or withdrawal of his offer. He failed to
transmit his conformity while the offer was subsisting. An acceptance which is not made in the manner prescribed by the offeror is not
effective but constitutes a counter-offer which the offeror may accept or reject. 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. However, when the letter-offer of the respondent was delivered
to the petitioner on March 16, 1990, he did not accept or reject the same for the reason that he needed time to decide whether to reject
or accept the same.There was no contract perfected between the petitioner and the respondent corporation The petitioners plaint that
he was not accorded by the respondent reasonable time to accept or reject its offer does not persuade. It must be underscored that
there was no time frame fixed by the respondent for the petitioner to accept or reject its offer. When the offeror has not fixed a period
for the offeree to accept the offer, and the offer is made to a person present, the acceptance must be made immediately. In this case, the
respondent made its offer to the petitioner when Da Costa handed over on March 16, 1990 to the petitioner its March 14, 1990 Letter-
offer but that the petitioner did not accept the offer. The respondent, thus, had the option to withdraw or revoke the offer, which the
respondent did on April 4, 1990.
2. YES
- Implicit in the authority given to Philtectic Corporation to demand for and recover
from the petitioner the subject car and to institute the appropriate action against
him to recover possession of the car is the authority to withdraw the respondent's
Letter-offer.
Disposition Decision of the CA is AFFIRMED
ROSENSTOCK VS BURKE
Facts: Defendant Edwin Burke owned a motor yacht, known as Bronzewing, which he acquired in Australia in 1920. He wanted to
sell the yacht and after several months plaintiff H. W. Elser, at the beginning of the year 1922, began negotiations with the defendant
for the purchase of it. The plan of the plaintiff was to organize a yacht club and sell it afterwards the yacht for P120,000, of which
P20,000 was to be retained by him as commission and the remaining P100,000 to be paid to the defendant. To be able to sell the yacht,
he wanted to make a voyage on board the yacht with business men so that he could make a sale to them. But the yacht needed some
repairs which in turn, plaintiff paid for because defendant had no budget for that. It has been stipulated that the plaintiff was not to pay
anything for the use of the yacht. Because of the said repairs, plaintiff loaned money from the Asia Banking Corporation. Since it
amounted to its maximum amount already, the bank could no longer give loans to plaintiff. Defendant now gave plaintiff the option of
sale to plaintiff amounting to P80,000; P5,000 each month during the first six months and P10,000 thereafter until full payment of the
price. Plaintiff in turn agreed by letter. Defendant demanded the plaintiff for performance after he accepted the offer of plaintiff for the
purchase of the yacht. However, plaintiff now brings action to recover the sum of money he used for repairs of the yacht.

Issue: Whether or not there was a valid contract of sale which is binding against plaintiff as used in the letter of offer which was
accepted by the defendant.

Held: The Supreme Court held that it was not a valid contract of sale. The words used by plaintiff could not be interpreted as a
definite offer to purchase the yacht, but simply a position to deliberate whether or not he would purchase the yacht. It was but a mere
invitation to a proposal being made to him, which might be accepted by him or not. He used such words as, I am in position and am
willing to entertain the purchase of the yacht. not I want to buy the yacht. Furthermore, the plaintiff wanted to organize a yacht
club and the only thing he wanted from defendant was he sells it so that he could profit from it if he re-sells it. The letter of the
plaintiff not containing a definite offer but a mere invitation to an offer being made to him. Plaintiff is bound to pay the amount of the
repairs of the yacht in exchange for the use thereof.