ROBERN vs.
PELA CONTENTION OF RESPONDENT PELA:
TOPIC: Essential Elements of a Contract of
Sale; stages of contract
FACTS: Al-Amanah Bank owned a 2000-
square meter which, thru its OIC Dalig, asked
some of the members of PELA (informal
settlers) to desist from building their houses on
the lot and to vacate the same, unless they are
interested to buy it.
The informal settlers expressed their interest to
buy it, which was turned down for being far
below its asking price.
Consequently, Al-Amanah reiterated its
demand to the informal settlers to vacate the
lot.
In a letter, dated March 18, 1993, the
informal settlers together with other
members comprising PELA offered to
purchase the lot for P300,000.00, half of
which shall be paid as down payment and
the remaining half to be paid within one
year. In the lower portion of the said letter,
Al-Amanah made the following annotation:
Note: Subject offer has been
acknowledged/received but processing to take
effect upon putting up of the partial amt. of
P150,000.00 on or before April 15, 1993.
PELA had deposited P150,000.00 as
evidenced by four bank receipts labelled the
payments as "Partial deposit on sale, the 4th
receipt as "Partial/Full payment on deposit on
sale. In the meantime, the PELA members
remained in the property and introduced further
improvements. Subsequently, Al Amanah
wrote informing PELA of the Head Office’s
disapproval of PELA’s offer to buy the said
2,000-square meter lot.
That it had already reached an agreement with
Al-Amanah regarding the sale of the subject lot
based on their offered price.
AL AMANAH: Accepted the offer of Robern’s
indicating therein that Robern is interested to
buy the lot for P400,000.00; that it has already
deposited 20% of the offered purchase price;
that it is buying the lot on "as is" basis; and,
that it is willing to shoulder the relocation of all
informal settlers therein and the Head Office
had accepted Robern’s offer.
Robern was informed of the acceptance. Al-
Amanah stressed that it is Robern’s
responsibility to eject the occupants in the
subject lot, if any, as well as the payment of the
remaining amount within 15 days; otherwise,
the P80,000.00 deposit shall be forfeited.
PELA consigned P150,000.00 in the RTC of
Davao City which Al-Amanah asked the latter
to withdraw the amount consigned. PELA filed
a suit for Annulment and Cancellation of Void
Deed of Sale against Al-Amanah, itsand
Robern’s
It insisted that as early as March 1993 it has a
perfected contract of sale with Al-Amanah.
However, in an apparent act of bad faith and in
cahoots with Robern, Al-Amanah proceeded
with the sale of the lot despite the prior sale to
PELA.
Incidentally, the trial court granted PELA’s
prayer for a TRO. The RTC’s grant of injunctive
relief was affirmed by the CA when the factual
and legal bases for its issuance were
questioned before the appellate court.
ISSUE: whether there was a perfected contract
of sale between PELA and Al-Amanah, the
resolution of which will decide whether the sale
of the lot to Robern should be sustained or not.
HELD: No, there is no perfected contract of
sale between PELA and Al-Amanah.
A contract of sale is perfected at the moment
there is a meeting of minds upon the thing
which is the object of the contract and upon the
price.
and may be shown by acts, conduct, or words
of the accepting party that clearly manifest a
present intention or determination to accept the
offer to buy or sell. Thus, acceptance may be
shown by the acts, conduct, or words of a party
recognizing the existence of the contract of
sale.57

Thus, for a contract of sale 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."49
In the case at bench, there is no controversy
anent the determinate subject matter, i.e., the
2,000-square meter lot. This leaves us to
resolve whether there was a concurrence of
the remaining elements.
There is no perfected contract of sale
between PELA and Al-Amanah for want of
consent and agreement on the price.
When PELA Secretary Florida Ramos (Ramos)
testified, she referred to the March 18, 1993
letter which PELA sent to Al-Amanah as the
document supposedly embodying the
58
perfected contract of sale. However, we find
that the March 18, 1993 letter referred to
was merely an offer to buy.

As for the price, fixing it can never be left to

the decision of only one of the contracting
parties. But a price fixed by one of the
contracting parties, if accepted by the other,
gives rise to a perfected sale.

As regards consent, when there is merely

an offer by one party without acceptance of
the other, there is no contract. The decision
to accept a bidder’s proposal must be
communicated to the bidder. However, a
binding contract may exist between the parties
whose minds have met, although they did not
affix their signatures to any written document,
as acceptance may be expressed or implied. It
can be inferred from the contemporaneous and
subsequent acts of the contracting parties."

Thus, we held:
x x x The rule is that except where a formal
acceptance is so required, 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,
DIZON VS GABORRO
Facts:
Dizon was the owner of the three (3) parcels of
land. He constituted a first mortgage lien in
favor of the DBP in order to secure a loan in
the sum of P38,000.00 and a second mortgage
lien in favor of the PNB to cure his
indebtedness to said bank in the amount of
P93,831.91.
Petitioner Dizon having defaulted in the
payment of his debt, the DBP foreclosed the
mortgage extrajudicially.
Sometime Alfredo G. Gaborro and Jose P.
Dizon met and he became interested in the
lands of Dizon. Dizon originally intended to
lease to Gaborro the property which had been
lying idle for some time. But as the mortgage
was already foreclosed by the DPB and the
bank in fact purchased the lands at the
foreclosure sale, they abandoned the projected
lease.
Dizon and Alfredo Gaborro. on the same day,
constitute an absolute sale of the three parcels
of land therein described or merely
an equitable mortgage or conveyance
thereof by way of security for reimbursement
or repayment by petitioner Jose P. Dizon of
any and all sums which may have been paid to
the DBP and the PNB by Gaborro. Said
documents were executed by the parties and
the payments were made by Gaborro for the
debt of Dizon to said banks.
Gaborros contention: Deed of Sale with
Assumption of Mortgage trial Option to
Purchase Real Estate
Dizon’s contention: Merely an equitable
mortgage or conveyance thereof by way of
security for reimbursement, refund or
repayment by petitioner Jose P. Dizon
Issue
Whether or not the deed was of a Deed of Sale
with Assumption of Mortgage', and Option to
Purchase Real Estate or merely an equitable
mortgage or conveyance thereof by way of
security for reimbursement, refund or
repayment by petitioner Jose P. Dizon?
Held:
SC ruled that the agreement between
petitioner Dizon and respondent Gaborro is
one of those inanimate 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. 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, 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.
GABRIEL v. MONTE DE PIEDAD Y CAJA DE
AHORROS and CA
Facts: Chattel mortgage executed by Leoncio
in favour of Monte de Piedad was valid for not
being contrary to public policy, the law and
morals, absent proof.
Leoncio Gabriel, appraiser of jewels in the
pawnshop of Monte de Piedad, promised to
pay P14,679,07 (the value of the deficiencies
due to erroneous appraisal of the pawned
jewels) where he had failure to pay. He was
terminated allegedly without cause and notice
> SUIT by Monte de Piedad against Leoncio
for payment of the debt where the mortgage
was insufficient
Contention of Leoncio:
1) The chattel mortgage was void because
a) it is contrary to law, morals and public
policy;
b) he was made to sign it against his will
and through misrepresentation where E. Marco
(Director-General) signed in behalf of Monte de
Piedad without the latter’s authority,
c) c) the subject matter and
considerations of the mortgage do not exist,
and (
d) d) the payments already made
allegedly for the mortgage were in fact his
salaries; (2) his acquittal in a criminal case that
used the chattel mortgage as evidence of his
liability was a bar to the present civil case
ISSUE: WON the chattel mortgage is contrary
to law, morals or public policy?
RULING:
> Chattel Mortgage does not violate the law,
morals or public policy
> Chattel Mortgage does not lack consideration
> It was executed voluntarily to guarantee the
deficiencies resulting from his erroneous
appraisals of the jewels
(CA Held)
> Thus, a preexisting admitted liability is a
good consideration for a promise >
EXCEPTIONS: if the inadequacy of the
consideration is so gross as to amount to
fraud, oppression or undue influence, or when
statutes require the consideration to be
adequate
> Compliance with the Act 1508, Chattel
Mortgage Law, Section 5
> Marco signed as Director-Manager with
confirmation from the administration > Law on
chattel mortgage contracts only need
substantial compliance and not literal
> No res judicata where acquittal in criminal
case bars the present civil case > No identity of
subject matter and no dependence of the civil
to the criminal
>> Public Policy
> A contract which is neither prohibited by law
nor condemned by judicial decision, nor
contrary to public morals, contravenes no
public policy
> Violative of public policy if the contract
has for its consideration a tendency to
injure the public, or if it is against the public
good, or if it contravenes some established
interests of society, or is inconsistent with
sound policy and good morals, or tends
clearly to undermine the security of
individual rights, whether of personal
liability or of private property
>> Consideration
> right, interest, benefit, or advantage
conferred upon the promisor, to which he is
otherwise not lawfully entitled, or any
detriment, prejudice, loss, or disadvantage
suffered or undertaken by the promise other
than to such as he is at the time of consent
bound to suffer
PIA VS OPLE
FACTS: 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. The contracts, which
became effective on 9 January 1979, provided
in pertinent portion as follows:
SEC 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
SEC 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
SEC 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.
Roughly 1 year and 4 months prior to the
expiration of the contracts of employment, PIA
informed 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
back wages.
ISSUE: 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.
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.