1

Robern vs People’s Landless

1. Al Amanah owned a 2000 square meter lot located in Magtuod, Davao City.
2. On December 12, 1992, Al-Amanah Davao Branch asked some of the members of PELA (People’s
Landless Association) to desist from building their houses on the lpot and to vacate the same,
unless they are interested to buy it.
3. The informal settlers thus expressed their interest to but the lost at P100 per square meter,
which Al-Amanah truned down for being far below its asking price.
4. Consequently, the informal settlers offered to purchase the lot for P300K, half of which shall be
paid as down payment and the remaining half to be paid within one year. In the said letter, Al-
Amanah made the following annotation:
Subject offer has been acknowledged/reeived but processing to take effect upon putting
up of the partial amount of P150K on or before April 15, 1993.
5. On November 29, 1993, Al-Amanah wrote to PELA that the head office disapproved PELA’s offer
to buy said lot. And so, Al-Amanah sent letters to PELA members demanding that they vacate
the lot.
6. Meanwhile, Robern, the petitioner in this case, made an offer to Al-Amanah to buy the lot for
P400K. Thereafter, Al-Amanah issued a Recommendation Sheet addressed to its Board
Operations Committee. Robern committed that it is willing to shoulder the relocation of all
informal settlers therein. Subsequently, the Head Office informed the Davao Branch that the
Board Operations Committee had accepted Robern’s offer.
7. However, Roberm subsequently expressed to Al-Amanah its uncertainty on the status of the
subject lot considering the claim of the informal settlers.
8. To convince Robern that it has no existing contract with PELA, Al-Amanah furnished it with
copies of the HO’s rejection letter of PELA’s bid, the demand letters to vacate, and the proof of
consignment of PELA’s P150K deposit to the RTC of Davao City that PELA refused to withdraw.
9. Robern then paid the balance of the purchase price and the Deed of Sale was executed and
issued thereafter.
10. A week later, PELA consigned the P150K balance in the RTC of Davao City.
11. 3 months later, members of PELA who were facing demolition of their houses, filed a suit for
Annulment and Cancellation of Void Deed of Sale before the RTC. It argued that it has a
perfected contract of sale with Al-Amanah and that in an apparent bad faith they proceeded
with the sale of the lot despite of the prior sale to PELA.
12. The respondents on the other hand argued that the bank has every right to sell ots lot to any
interested buyer with the best offer and thus they chose Robern. They clarified that the P150K
PELA handed to them is not part of the payment but merely a deposit in connection with its
offer. They asserted that they properly apprised PELA that the offer was still subject to the
approval of Al-Amanah’s Head Office.
13. Also, the annotation appearing in the bottom part of the said letter could not be construed as an
acceptance because the same is a mere acknowledgment of receipt of the letter not the offer
which will still be subject to processing.
14. PELA then elevated the case to the CA>
15. CA reversed RTC. CA ruled that thwere was already a perfected contract of sale between PELA
and AL-Amanah. It held that the annotation could mean that Al-Amanah accepted PELA’s offer.
The CA also observed that the subsequent receipt by Al-Amanah of the amounts totalling P150L
and the annotation of “deposit on sale of TCT Noo. 138914”on the receipts it issued explicitly
indicated acceptance on the part of Al-Amanah. CA invalidated the contract of sale between
Robern and Al-Amanah.
 2

16. The case was elevated before the SC.

17. ISSUE: WON there was a perfected contract of sale between PELA and AL-Amanah
18. A contract of sale is perfected at the moment there is a meeting of minds upon a thing which is
the object of the contract and upon the proce.
19. For a contract to be valid, all of the following essential elements must concur:
a. Consent or meeting of the minds
b. Determinate subject matter
c. Price certain in money or its equivalent
20. As regards consent, when there is merely an offer by one party without the acceptance of the
other, there is no contract. The decision to accept the bidder’s offer must be communicated to
the bidder.
21. Although the acceptance must be affirmatively and clearly made and must be evidenced by
some acts or conduct communicated to the offeror, it may be made either in a formal or an
informal manner and may be shown by acts, conducts, or words of the accepting part that
clearly manifest a present intention to accept the offer.
22. The Court ruled that there was no perfected contract of sale between PELA and AL-Amanah for
want of consent and agreement on the price.
23. The annotation cannot be construed as an acceptance of PELA’s offer to buy. Also the receipt of
the amount.
24. Also, it was made clear to PELA that the offer was still subject to approval of the Head Office.
25. There are three stages of a contract:
a. Preparation or negotiation which the prospective parties indicate their interest in
the contract and ends at the moment of their agreement
b. Perfection or bith which takes place when the parties agree upon all the essential
elements of the contract
c. Consummation occurs when the parties fulfil or perform the terms agreed upon,
culminating in the extinguishment thereof.
26. In the case at bar, remained at the negotiation stage. The offer never materialized.

DIZON vs Gaborro
1. Jose Dizon was the owner of three parcels of land situated in Malabacat, Pampanga.
2. He constituted a mortgage lien in favour of DBP in order to secure a loan in the amount of P38K
and a second mortgage lien in favour of PNB for a loan of P93K.
3. Petitioner defaulted in the payments of his debt. So the DBP foreclosed the mortgage.
4. Then subsequently, Alfredo Gaborro and Dizon met. Gaborro became interested in the lands of
Dizon. Dizon originally intended to lease to Gaborro the property but as the mortagage was
already foreclosed by the DBP and the bank in fact purchased the lands at the foreclosure sale,
they abandoned the projected lease. They instead entered into two contracts with captions:
Deed of Sale with Assumption of Mortgage and Option to Purchase Real Estate.`
5. Gaborro then took possession of the three parcels of land. Gaborro wrote a letter to the DBP
offering different terms of payment of the loan of Dizon assumed by Gaborro.
6. The Board of Governors of DBP then approved the offer of Gaborro.
7. Subsequently, Dizon assigned his right of redemption to Gaborro in an instrument. Thereafter,
Gaborro made several payments to the DBP and PNB and introduced improvements, cultivated
lands, among others.
8. In 1961, Dizon wrote a letter to Gaborro informing him that he is formally offering to reimburse
Gaborro of whatever he paid to the banks but without however tendering any cash and
demanding an accounting of the income of the property, contending that the transaction they
 3

entered into was one of antichresis (a written pledge and transfer from a debtor to a creditor
of possession of immovable property giving the creditor the right to the fruits (as rents) of the
property which are to be deducted from the interest or principal of the debt).
9. He alleged that the two documents they executed did not express the true intention and
agreement between the parties. That their real agreement was not an absolute sale but merely
an equitable mortgage or conveyance by way of security for the reimbursement or refund by
Dizon to Gaborro of any and all sums which the latter may have paid on account of the
mortgage debts.
10. DBP meanwhile argued that the plaintiff Dizon was no longer the owner of the land in
question because DBP acquired them at the extrajudicial foreclosure sale and that the only
right of Dizon was the right to redeem.
11. Gaborro argued that the Deed of Sale with Assumption of Mortgage expressed the true
agreement of the parties but the Option to Purchase Real Estate did not.
12. RTC – the true agreement was that the defendant would assume and pay the indebtedness of
the plaintiff to the DBP and the PNB, the defendant was given the possession and enjoyment
of the properties in question until the plaintiff shall have reimbursed to defendant fully the
amount of P131K plus 6% interest.
13. CA – affirmed the RTC.
14. SC:
a. the judgment debtor remains in possession of the property foreclosed and sold,
during the period of redemption. If the judgment debtor is in possession of the
property sold, he is entitled to retain it and receive the fruits, the purchaser not
being entitled to such possession.
b. Upon foreclosure and sale, the purchaser is entitled to a certificate of sale executed
by the sheriff. (Section 27, Revised Rules of Court) After the termination of the
period of redemption and no redemption having been made, the purchaser is
entitled to a deed of conveyance and to the possession of the properties.
c. The weight of authority is to the effect that the purchaser of land sold at public
auction under a writ of execution only has an inchoate right in the property, subject
to be defeated and terminated within the period of 12 months from the date of
sale, by a redemption on the part of the owner. Therefore, the judgment debtor in
possession of the property is entitled to remain therein during the period allowed
for redemption.
d. after the extrajudicial foreclosure and sale of his properties, petitioner Dizon
retained the right to redeem the lands, the possession, use and enjoyment of the
same during the period of redemption. And these are the only rights that Dizon
could legally transfer, cede and convey unto respondent Gaborro under the
instrument captioned Deed of Sale with Assumption of Mortgage.
e. Such an instrument cannot be legally considered a real and unconditional sale of
the parcels of land, firstly, because there was absolutely no money consideration
therefor, as admittedly stipulated, the sum of P131,831.91 mentioned in the
document as the consideration ''receipt of which was acknowledged'1 was not
actually paid; and secondly, because the properties had already been previously
sold by the sheriff at the foreclosure sale, thereby divesting the petitioner of his
full right as owner thereof to dispose and sell the lands.
f. In legal consequence thereby, respondent Gaborro as transferee of these certain
limited rights or interests under Exh. A-Stipulation, cannot grant to petitioner
 4

Dizon more than said rights, such as the option to purchase the lands as stipulated
in the document called Option to Purchase Real Estate
g. This is necessarily so for the reason that respondent Gaborro did not purchase or
acquire the full title and ownership of the properties by virtue of the Deed of Sale
With Assumption of Mortgage
h. The only legal effect of this Option Deed is the grant to petitioner the right to
recover the properties upon reimbursing respondent Gaborro of the total sums of
money that the latter may have paid to DBP and PNB on account of the mortgage
debts, the said right to be exercised within the stipulated 5 years period.
i. We agree with the findings of the trial and appellate courts that the true
intention of the parties is that respondent Gaborro would assume and pay
the indebtedness of petitioner Dizon to DBP and PNB, and in consideration
therefor, respondent Gaborro was given the possession, the enjoyment and
use of the lands until petitioner can reimburse fully the respondent the
amounts paid by the latter to DBP and PNB, to accomplish the following
ends: (a) payment of the bank obligations; (b) make the lands productive
for the benefit of the possessor, respondent Gaborro; (c) assure the return
of the land to the original owner, petitioner Dizon, thus rendering equity
and fairness to all parties concerned.
j. SC agreed to the Reformation of RTC and CA.
k. In view of all these considerations, the law and jurisprudence, and the facts
established, We find that the agreement between petitioner Dizon and
respondent Gaborro is one of those innominate contracts under Art. 1307
of the New Civil Code whereby petitioner and respondent agreed "to give
and to do" certain rights and obligations respecting the lands and the
mortgage debts of petitioner which would be acceptable to the bank, but
partaking of the nature of the antichresis insofar as the principal parties,
petitioner Dizon and respondent Gaborro, are concerned.

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

 5

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 month’s 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).

PIA’s 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?
 6

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.
 7

Cui vs Arellano University

TITLE: Emetrio Cui v Arellano University
CITATION: GR NO. L15127, May 30, 1961 | 112 Phil 135

FACTS:

Emetrio Cui took his preparatory law course at Arellano University. He then enrolled in its
College of Law from first year (SY1948-1949) until first semester of his 4th year. During these
years, he was awarded scholarship grants of the said university amounting to a total of
P1,033.87. He then transferred and took his last semester as a law student at Abad Santos
University. To secure permission to take the bar, he needed his transcript of records from
Arellano University. The defendant refused to issue the TOR until he had paid back the
P1,033.87 scholarship grant which Emetrio refunded as he could not take the bar without
Arellano’s issuance of his TOR.

On August 16, 1949, the Director of Private Schools issued Memorandum No. 38 addressing all
heads of private schools, colleges and universities. Part of the memorandum states that “the
amount in tuition and other fees corresponding to these scholarships should not be
subsequently charged to the recipient students when they decide to quit school or to transfer
to another institution. Scholarships should not be offered merely to attract and keep students
in a school”.

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 they transfer before graduation, is
contrary to public policy, sound policy and good morals or tends clearly to undermine the
security of individual rights and hence, null and void.

The court sentenced the defendant to pay Cui the sum of P1,033.87 with interest thereon at
the legal rate from Sept.1, 1954, date of the institution of this case as well as the costs and
dismissing defendant’s counterclaim.

Arroyo v Berwin

F: Ignacio Arroyo and Alfred Berwin are residents of Iloilo.

 8

Berwin is a procurador judicial (a person granted permission to appear before the courts relating
on behalf of clients, etc. without being a lawyer) in the law office of Atty. John Bordman.

Berwin represented Marcela Juaneza in the Justice of the Peace of Iloilo in proceeding for a
theft case filed by plaintiff Ignacio Arroyo. Marcela Juaneza lost then appealed at the CFI of
Iloilo.

On the day of the hearing at the CFI, Berwin requested Ignacio Arroyo to agree to dismiss
the criminal proceeding and thereafter stipulated in the presence of Roque Samson that "1)
his client, Marcela would recognize the plaintiff's ownership in the land situate on Calle
San Juan, Molo, Iloilo where Marcela ordred the cane (as in sugar cane) cut, which land
and which cut cane are referred to in the cause for the theft. Furthermore, they agreed that
"2) the plaintiff should obtain a Torrens title to said land and Marcela would not oppose
such application for registration". PROVIDED THAT Arroyo would ask that the case be
dismissed against Marcela

Arroyo complied with the agreement. The case against Marcela was dismissed. Berwin did not
wish to comply with their agreement (Arroyo delivered to him the written agreement for
Marcela's signature but Berwin failed to give him back the same).

Arroyo filed for specific performance praying that judgment be rendered ordering Arroyo to
cause his client Marcela to sign the written agreement.

CFI- dismissed, the consideration of the contract is illegal.

I: WON Berwin may be ordered to comply with the agreement?

H: NO. An agreement to stifle the prosecution of the person charged with theft for a valuable
consideration is manifestly contrary to public policy and due administration of justice.

Art. 1255- The contracting parties may make the agreement and establish the clauses and
condition which they may deem advisable, provided they are not in contravention of law,
morals or public order.

Art. 1275- Contracts without consideration or with an illicit one have no effect whatsoever. A
 9

consideration is illicit when it is contrary to law and good morals.

Petition denied.

Filipinas Compania vs Mandanas

In October 1941, Christern, Huenefeld and Company, a German company, obtained an

insurance policy from Filipinas Compañia for the former’s merchandise contained in a
building located in Binondo, Manila. Filipinas Compañia is an American controlled company.
During the Japanese occupation, the building housing the insured merchandise was
burned. Christern filed its claim amounting to P92,650.00 but Filipinas Compañia refused to
pay alleging that Christern is a corporation whose majority stockholders are Germans; that
during the Japanese occupation, America declared war against Germany hence the
insurance policy ceased to be effective because the insured has become an enemy.
Filipinas Compañia was eventually ordered to pay Christern as ordered by the Japanese
government.
ISSUE: Whether or not Christern, Huenefeld and Co is entitled to receive the proceeds from
the insurance claim.
HELD: No. There is no question that majority of the stockholders of Christern were German
subjects. This being so, Christern became an enemy corporation upon the outbreak of the
war between the United States and Germany. The Philippine Insurance Law (Act No. 2427,
as amended,) in Section 8, provides that “anyone except a public enemy may be insured.” It
stands to reason that an insurance policy ceases to be allowable as soon as an insured
becomes a public enemy. Christern should return the amount it was earlier paid.

Bustamante vs Rosel Digest

Facts: Respondent Rosel entered into a loan agreement with petitioner spouses Bustamante wherein
the latter borrowed P100,000 payable in 2 years. To guarantee payment, the spouses put as collateral
70 sq m of their lot inclusive of the apartment therein. In the event of borrowers default, contract states
the lender has the option to buy or purchase the collateral for P200,000.

When the loan was about to mature on March 1, 1989, respondents proposed to buy the said portion at
the pre-set price. Petitioners, however, refused and requested for extension of time to pay the loan. On
the due date, petitioners tendered payment of the loan to respondents which the latter refused to
accept. On March 4, 1990, respondents sent a demand letter asking petitioner to sell the collateral
pursuant to the option to buy embodied in the loan agreement. Prior to that, they filed with the RTC an
action for specific performance in February.

Issue: Is the respondent justified in compelling petitioners to sell the portion of the lot pursuant to the
stipulation in the loan?
 10

Held:

No as doing so is tantamount to pactum commissorium. The elements of pactum commissorium are

as follows: (1) there should be a property mortgaged by way of security for the payment of the
principal obligation, and (2) there should be a stipulation for automatic appropriation by the
creditor of the thing mortgaged in case of non-payment of the principal obligation within the
stipulated period.

In this case, the intent to appropriate the property given as collateral in favor of the creditor
appears to be evident, for the debtor is obliged to dispose of the collateral at the pre-agreed
consideration amounting to practically the same amount as the loan. In effect, the creditor
acquires the collateral in the event of non payment of the loan. This is within the concept of
pactum commissorium. Such stipulation is void.