BATCHELDER VS CENTRAL BANK
J. FERNANDO
FACTS
CB issued Circular No. 20 imposing exchange contract in this jurisdiction.
Resolution: "For imports against proceeds of contracts entered into prior to April 25,
1960, the preferred buying rate shall govern, regardless of the present commodity
classifications."
There was however a modification arising from Monetary Board
Resolution No. 695 of April 28, 1961, which specified that the agent bank should,
upon compliance with its terms, credit the contractor's accounts in pesos, the buying
rate being governed by the appropriate rules and regulations.
plaintiff surrendered to the Central Bank, through the latter's authorized
agents, his dollar earnings amounting to U.S. $199,966.00. The present action,
therefore, seeks to compel the defendant to permit the plaintiff to utilize the said
balance of his 90% surrendered earnings for importation at the preferred rate of
exchange which is P2.00 per U.S. $1.00".
Batchelder (engaged in construction business) filed a suit to compel
defendant Central Bank of the Philippines, now appellant, to resell to him $170,210.60
at the preferred rate of exchange of two Philippine pesos for one American dollar, more
specifically P2.00375, or, in the alternative, to pay to him the difference between the
peso cost of such amount at the market rate prevailing on the date of the satisfaction
of the judgment in his favor and the peso cost of $170,210.60 at said preferred rate.
CB: plaintiff has no right to reacquire the sum at the preferred rate of exchange for the
Monetary Board Resolutions Nos. 857 and 695 relied upon simply laid down a mere
policy without in any way giving rise to a valid and binding agreement. Hence it did
give rise to a contract that must be complied with.
ISSUE: wn the issuance of a monetary policy by BSP, thereafter implemented by the
appropriate resolutions, as to the rate of exchange at which dollars after being
surrendered and sold to it could be re-acquired, creates a contractual obligation.
HELD:
It is the conclusion of Court that the governing principle of law applicable to
actuation of administrative agencies, like the Central Bank, precludes a finding that
under the circumstances disclosed by the case, there was a contract in law giving
rise to an obligation which must be fulfilled by such governmental body.
"the area of agreement must extend to all points that the parties deem material or
there is no contract."
A contract is the accord of two (or more) persons (with previously diverging
interests) for the purpose of creating, modifying or extinguishing a juridical
relation between them."
the birth or perfection of a consensual contract, Article 1315, commences
from the moment the parties come to an agreement on a definite subject
matter and valid consideration.
The consent, in the matter of contracts, is composed of a double operation. (1)
The parties must commence by agreeing as to the contents the
"convention" that is to say, by making sufficiently precise the object and the
essential conditions, and discussing the particular clauses which they desire
to introduce to modify or to complete the ordinary effects ... . (2) This first
operation having been terminated, the parties are in accord on the projected
contract: there is between them what Littre calls the uniformity of opinions,
which is one sense of the word "consent", but the contract is not included, it
still exists in a projected state.
the Central Bank as a public corporation could enter into contracts. The contract
could not possible be maintained through the exercise of regulatory power to
implement statutory provisions.
CONSENSUALITY OF CONTRACTS
REPUBLIC VS PLDT
J.B.L. REYES
FACTS:
Sometime in 1933, the defendant, PLDT, and the RCA Communications, Inc.,
entered into an agreement whereby telephone messages, coming from the United
States and received by RCA's domestic station, could automatically be transferred to
the lines of PLDT; and vice-versa, for calls collected by the PLDT for transmission from
the Philippines to the United States. The contracting parties agreed to divide the tolls,
as follows: 25% to PLDT and 75% to RCA. The sharing was amended in 1941 to 30%
for PLDT and 70% for RCA, and again amended in 1947 to a 50-50 basis. The
arrangement was later extended to radio-telephone messages to and from European
and Asiatic countries. Their contract contained a stipulation that either party could
terminate it on a 24-month notice to the other. 4 On 2 February 1956, PLDT gave
notice to RCA to terminate their contract on 2 February 1958.
The Bureau of Telecommunications set up its own Government Telephone
System by utilizing its own appropriation and equipment and by renting trunk lines of
the PLDT to enable government offices to call private parties. Its application for the use
of these trunk lines was in the usual form of applications for telephone service,
containing a statement, above the signature of the applicant, that the latter will abide
by the rules and regulations of the PLDT which are on file with the Public Service
Commission.
The plaintiff, through the Director of Telecommunications, entered into an
agreement with RCA Communications, Inc., for a joint overseas telephone service
whereby the Bureau would convey radio-telephone overseas calls received by RCA's
station to and from local residents.
defendant Philippine Long Distance Telephone Company, complained to the
Bureau of Telecommunications that said bureau was violating the conditions under
which their Private Branch Exchange (PBX) is inter-connected with the PLDT's
facilities, referring to the rented trunk lines, for the Bureau had used the trunk
lines not only for the use of government offices but even to serve private persons
or the general public, in competition with the business of the PLDT; and gave
notice that if said violations were not stopped by midnight of 12 April 1958, the PLDT
would sever the telephone connections which it did.
The Bureau of Telecommunications had proposed to the PLDT on 8 January
1958 that both enter into an interconnecting agreement, with the government paying
(on a call basis) for all calls passing through the interconnecting facilities from the
Government Telephone System to the PLDT.
Republic commenced suit against the defendant PLDT praying in its
complaint for judgment commanding the PLDT to execute a contract with plaintiff,
through the Bureau, for the use of the facilities of defendant's telephone system
throughout the Philippines under such terms and conditions as the court might
consider reasonable, and for a writ of preliminary injunction against the defendant
company to restrain the severance of the existing telephone connections and/or restore
those severed.
ISSUE: Whether the Republic can compel PLDT to enter into an interconnecting
contract with it due to failure to agree on the terms and and conditions of the
interconnection.
HELD:
(general rule) PLDT cannot be coerced to enter into a contract where no
agreement is had between them as to the principal terms and conditions of the
contract. Freedom to stipulate such terms and conditions is of the essence of our
contractual system, and by express provision of the statute, a contract may be
annulled if tainted by violence, intimidation, or undue influence (Articles 1306, 1336,
1337, Civil Code of the Philippines).
But the court a quo has apparently overlooked that while the Republic may
not compel the PLDT to celebrate a contract with it, the Republic may, (exception) in
the exercise of the sovereign power of eminent domain, require the telephone
company to permit interconnection of the government telephone system and
that of the PLDT, as the needs of the government service may require, subject to
the payment of just compensation to be determined by the court. Nominally, of
course, the power of eminent domain results in the taking or appropriation of title to,
and possession of, the expropriated property; but no cogent reason appears why the
said power may not be availed of to impose only a burden upon the owner of
condemned property, without loss of title and possession. It is unquestionable that real
property may, through expropriation, be subjected to an easement of right of way. The
use of the PLDT's lines and services to allow inter-service connection between both
telephone systems is not much different. In either case private property is subjected to
a burden for public use and benefit. If, under section 6, Article XIII, of the
Constitution, the State may, in the interest of national welfare, transfer utilities
to public ownership upon payment of just compensation, there is no reason why
the State may not require a public utility to render services in the general
interest, provided just compensation is paid therefor. Ultimately, the beneficiary of
the interconnecting service would be the users of both telephone systems, so that the
condemnation would be for public use.
Republic's cause of action is predicated upon the radio telephonic isolation
of the Bureau's facilities from the outside world if the severance of interconnection
were to be carried out by the PLDT, thereby preventing the Bureau of
Telecommunications from properly discharging its functions, to the prejudice of
the general public. Save for the prayer to compel the PLDT to enter into a contract
(and the prayer is no essential part of the pleading), the averments make out a case for
compulsory rendering of inter-connecting services by the telephone company upon
such terms and conditions as the court may determine to be just. And since the lower
court found that both parties "are practically at one that defendant (PLDT) is entitled to
reasonable compensation from plaintiff for the reasonable use of the former's telephone
facilities" the lower court should have proceeded to treat the case as one of payment of back salaries. Said reply states that respondent David decided to be his
condemnation of such services independently of contract and proceeded to determine counsel in the case because of the value to him of their intimate relationship over the
the just and reasonable compensation for the same, instead of dismissing the petition. years and "not, primarily, for a professional fee." It is patent then, that respondent
David agreed to render professional services to petitioner Corpus secondarily for a

CORPUS VS CA professional fee. This is stressed by the last paragraph of said reply which states that

J. MAKASIAR "however, when you shall have obtained a decision which would have finally resolved
the case in your favor, remembering me then will make me happy. In the meantime,

FACTS: you will make me happier by just keeping the check." Thereafter, respondent David

Petitioner Marino Corpus contends that respondent David is not entitled to continued to render legal services to petitioner Corpus, in collaboration with Atty.

attorney's fees because there was no contract to that effect. On the other hand, Alverez until he and Atty. Alvarez secured the decision directing petitioner's

respondent David contends that the absence of a formal contract for the payment of reinstatement with back salaries, which legal services were undisputedly accepted by,

the attorney's fees will not negate the payment thereof because the contract may be and benefited petitioner.

express or implied, and there was an implied understanding between the petitioner Moreover, the payment of attorney's fees to respondent David may also be

and private respondent that the former will pay the latter attorney's fees when a final justified by virtue of the innominate contract of facio ut des (I do and you give which is

decision shall have been rendered in favor of the petitioner reinstating him to -his based on the principle that "no one shall unjustly enrich himself at the expense of

former position in the Central Bank and paying his back salaries. another." innominate contracts have been elevated to a codal provision in the New Civil
Code by providing under Article 1307 that such contracts shall be regulated by the

ISSUE: Whether respondent Court of Appeals erred in finding that petitioner accepted stipulations of the parties, by the general provisions or principles of obligations and

private respondent's Atty. Juan T. Davids services "with the understanding of both contracts, by the rules governing the most analogous nominate contracts, and by the

that he (private respondent) was to be compensated" in money; and that the fee of customs of the people. The rationale of this article was stated in the 1903 case of Perez

private respondent was contingent vs. Pomar (2 Phil. 982). In that case, the Court sustained the claim of plaintiff Perez for
payment of services rendered against defendant Pomar despite the absence of an

HELD: express contract to that effect, thus:

While there was express agreement between petitioner Corpus and

respondent David as regards attorney's fees, the facts of the case support the position It does not appear that any written contract was entered into between the

of respondent David that there was at least an implied agreement for the payment parties for the employment of the plaintiff as interpreter, or that any other

of attorney's fees. innominate contract was entered into but

Petitioner's act of giving the check for P2,000.00 through his aforestated April whethertheplaintiffsservicesweresolicitedorwhethertheywereoffered to the

18, 1962 letter to respondent David indicates petitioner's commitment to pay the defendant for his assistance, inasmuch as these services were accepted

former attorney's fees, which is stressed by expressing that "I wish I could give more and made use of by the latter, we must consider that there was a tacit and

but as you know we were banking on a SC decision reinstating me and reimbursing mutual consent as to the rendition of the services. This gives rise to the

my back salaries This last sentiment constitutes a promise to pay more upon his obligation upon the person benefited by the services to make

reinstatement and payment of his back salaries. Petitioner ended his letter that he was compensation therefor, since the bilateral obligation to render service as

"looking forward to a continuation of the case in the lower court, ... to which the interpreter, on the one hand, and on the other to pay for the service

certiorari-mandamus-quo warranto case was remanded by the Supreme Court for rendered, is thereby incurred. (Arts. 1088, 1089, and 1262 of the Civil

further proceedings. Code).

Moreover, respondent David's letter-reply of April 25, 1962 confirms the

promise of petitioner Corpus to pay attorney's fees upon his reinstatement and
EJERCITO,ET AL, VS ORIENTAL ASSURANCE CORP.
C.J. CERENO

FACTS:
Oriental Assurance Corporation issued a Surety Bond in favor of FFV
Travel & Tours, Inc. intended to guarantee the Company's payment of airline
tickets purchased on credit from participating members of International Air
Transport Association (IATA) to the extent of P3 million.
Petitioners and Merissa C. Somes (Somes) executed a Deed of Indemnity
in favor of respondent. The Surety Bond was effective for one year from its
issuance until 10 May 2000. It was renewed for another year, from 10 May 2000
to 10 May 2001,
FFV Travel & Tours, Inc. has been declared in default for failure to pay
its obligations. Consequently, IATA demanded payment of the bond, and
respondent heeded the demand on 28 November 2000 as evidenced by China
Bank Check No. 104949. IATA executed a Release of Claim on 29 November 2000
acknowledging payment of the surety bond.
Respondent sent demand letters to petitioners and Somes for
reimbursement of the P3 million pursuant to the indemnity agreement. For their
failure to reimburse respondent, the latter filed a collection suit.
RTC: no written agreement to show the intention of petitioners to renew the Deed
of Indemnity.
CA: authorized respondent to grant any renewals or extensions pursuant to the
indemnity agreement. The Deed of Indemnity contained a stipulation that the
signatories (petitioners) were authorizing the Company (respondent) to grant or
consent to the grant of any extension, continuation, increase, modification,
change or alteration, and/or renewal of the original bond.

ISSUE: Whether or not the Honorable Court of Appeals erred in ruling that
petitioners are liable to indemnify the respondent under the deed of indemnity
considering that petitioners did not give their consent to be bound thereby beyond
the one (1) year effectivity period of the original surety bond.

HELD: